NEW YORK (TheStreet) -- Shares of 3M (MMM) - Get 3M Company Report fell into negative territory Tuesday, even though the maker of Scotch Tape and Post-it Notes delivered its ninth-consecutive profitable quarter and record full-year revenue.
Investors who have waited for a buying opportunity have gotten it.
The St. Paul, Minn.-based industrial company said Tuesday that it earned a fourth-quarter profit of $1.18 billion or $1.81 a share, beating consensus estimates by 2 cents. The earnings beat also reflects a 12% year-over-year jump.
The company's profit increase extends its streak to five quarters of averaging at least an 11% year-over-year jump in earnings. Equally impressive what what 3M was able to do this with just a 2% year-over-year jump in revenue.
The company's fourth-quarter revenue grew to $7.72 billion, just shy of estimates of $7.76 billion, while organic local-currency revenue grew 6.3%. This includes a 10 basis-point increase to acquisitions.
When adjusting for currency fluctuations, 3M said that revenue grew 4.4% year over year.
As with its earnings, the year-over-year increase in revenue extends its streak to four quarters.
Meanwhile, full-year earnings were $7.49 a share on revenue of a record $31.8 billion, up 3.1% from a year earlier.
“3M delivered strong results in the fourth quarter, which culminated a solid 2014 performance,” said Inge G. Thulin, 3M’s chairman, president and chief executive. "We once again generated substantial free cash flow, which allowed for continued investment in our businesses and significant return of cash to our shareholders."
During the quarter, 3M said that it paid $544 million in cash dividends to shareholders, while buying back $1.3 billion of its stock. This means for all of last year, the company paid $2.2 billion in cash dividends, while buying back almost $6 billion of its stock.
In other words, 3M thinks that its shares are cheap. And investors shouldn't expect that they will remain cheap for very long.
This is because, despite headwinds from the strong dollar, the company affirmed its 2015 full-year performance expectations, saying that it expects 2015 earnings to be in the range of $8 to $8.30 a share, including 3% to 6% year-over-year growth in organic local-currency revenue.
The company also projects 2015 free cash flow conversion to be in the range of 90% to 100%.
This means that 3M expects to turn its profits into cash flow that can be re-invested into the business. It will also serve as catalyst for 3M to buy back more stock and/or raise its dividend.
All told, with guidance being so optimistic and the company remaining generous with shareholders, analysts will have to raise estimates, which supports a higher stock price. And when combined with its dividend yield of 2.50%, 3M is a high-quality investment that belongs in every investor's portfolio.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.