Will 3M (MMM) Stock Be Helped By Purchase Of Sumitomo Electric’s Stake in Venture?

NEW YORK (TheStreet) -- 3M Company  (MMM) said it will acquire the stake of Sumitomo Electric Industries's 25% stake in a venture for 90 billion yen, or $885 million, Bloomberg Businessweek reports.

After the acquisition, 3M will own all of Sumitomo 3M and the transaction is expected to close September 1, the company said in a statement.

Shares of 3M closed higher at $145.06 yesterday.

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TheStreet Ratings team rates 3M CO as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate 3M CO (MMM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MMM's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.85% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MMM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 3M CO has improved earnings per share by 11.2% 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 $6.72 versus $6.31 in the prior year. This year, the market expects an improvement in earnings ($7.46 versus $6.72).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Industrial Conglomerates industry average. The net income increased by 6.9% when compared to the same quarter one year prior, going from $1,129.00 million to $1,207.00 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Industrial Conglomerates industry and the overall market, 3M CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • You can view the full analysis from the report here: MMM Ratings Report

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