2024-05-04 08:30:00 ET
Summary
- 3M Company surpassed Wall Street estimates in its Q1 earnings release, underscoring the resilience of its turnaround.
- 3M buyers are likely looking past its legal challenges as new CEO Bill Brown takes charge.
- Despite massive legal liabilities, 3M's fundamentally strong business model and undervaluation position it for continued recovery.
- I explain why MMM is poised for a potential breakout, as it is no longer stuck in a downtrend bias.
3M Continues Its Organic Growth Recovery
As ex-CEO Mike Roman turned over the reins to Bill Brown this week, 3M Company ( MMM ) investors got the respite they needed. 3M reported its first-quarter earnings results, which surpassed Wall Street estimates. 3M reset its dividend policy after completing the divestiture of its healthcare business (spun off as Solventum ( SOLV )) in early April. However, notwithstanding 3M's anticipated dividend cut , that didn't surprise the market. 3M's healthcare business accounted for 30% of its overall adjusted free cash flow. Coupled with the need to remain cautious over its potentially massive legal liabilities, I assessed it as prudent for 3M management to reduce its dividend payout to 40% of its adjusted free cash flow (down from 60% previously)....
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3M: Still On Sale As Turnaround Continues