Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, increase in net income, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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Highlights from the ratings report include:
- 3M CO has improved earnings per share by 8.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, 3M CO increased its bottom line by earning $5.96 versus $5.64 in the prior year. This year, the market expects an improvement in earnings ($6.33 versus $5.96).
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Industrial Conglomerates industry average. The net income increased by 6.7% when compared to the same quarter one year prior, going from $1,088.00 million to $1,161.00 million.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- 47.50% is the gross profit margin for 3M CO which we consider to be strong. Regardless of MMM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MMM's net profit margin of 15.50% compares favorably to the industry average.
3M Company operates as a diversified technology company worldwide. 3M has a market cap of $60.86 billion and is part of the conglomerates sector and conglomerates industry. The company has a P/E ratio of 14.1, below the S&P 500 P/E ratio of 17.7. Shares are up 7.7% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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