There is a lot going on a
3M
these days, including some big legal settlements. Investors and Wall Street have reacted by essentially avoiding the stock. 3M (MMM) could change investor sentiment when it reports third-quarter earnings Tuesday morning.
Wall Street is looking for earnings per share of $2.34 from sales of $8 billion. In the third quarter of 2022, 3M reported $2.69 and $8.6 billion, respectively.
Coming out of the second-quarter report, 3M was expected to generate full-year earnings per share of between $8.60 and $9.10. That left between $4.46 and $4.96 a share for the second half of 2023, up from the $4.14 reported in the first half.
3M earned $10.10 in 2022. Earnings this year are down partly because 3M is battling a slowing economy, like many other manufacturing firms.
Since the end of the second quarter, 3M agreed to settle claims related to potentially faulty earplugs sold to the government for about $6 billion. That settlement, along with a June settlement related to chemicals produced by 3M and others that were found in groundwater, has led to a couple of Wall Street upgrades.
Both settlements are significant. Legal liabilities have been an overhang on 3M stock for years. They show up in Wall Street ratings. Only one analyst, or about 5% of the total, rates shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. One of the recent upgrades was from Sell to Hold. Currently, about 11% of analysts rate shares Sell, down from 20% a few months ago.
Legal overhangs and the overall economy have investors cautious too. Through midday trading on Monday, shares were down about 28% over the past 12 months. The
S&P 500
and
Dow Jones Industrial Average
were up 11% and 5%, respectively.
Management hosts a conference call at 9 a.m. Eastern time to discuss results.
There is a lot to discuss.
Write to Al Root at allen.root@dowjones.com
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