Long-established in the Conglomerates industry, 3M Co (MMM, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 1.34%, juxtaposed with a three-month change of 37.9%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of 3M Co.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 2/10
- GF Value rank: 1/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned 3M Co the GF Score of 62 out of 100, which signals poor future outperformance potential.
Understanding 3M Co Business
3M Co, a multinational conglomerate founded in 1902, sells tens of thousands of products ranging from sponges to respirators. The firm is well known for its extensive research and development capabilities, and it is a pioneer in inventing new use cases for its proprietary technologies. 3M is organized across three business segments: safety and industrial (representing around 44% of revenue), transportation and electronics (36%), and consumer (20%). The firm recently spun off its healthcare business, now known as Solventum. Nearly half of 3M's revenue comes from outside the Americas.
Financial Strength Breakdown
3M Co's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 0.44, which positions it worse than 93.67% of 411 companies in the Conglomerates industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. Additionally, the company's low cash-to-debt ratio at 0.76 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 3.5, which is worse than 93.09% of 492 companies in the Conglomerates industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations.
Growth Prospects
A lack of significant growth is another area where 3M Co seems to falter, as evidenced by the company's low Growth rank. Lastly, 3M Co's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Considering the company's financial strength, profitability, and growth metrics, the GF Score highlights 3M Co's unparalleled position for potential underperformance. For investors seeking more robust opportunities, GuruFocus Premium members can explore companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
