Thursday, August 3, 2017

3M Among The Crown Jewels With A Smudge

This has been an interesting earnings cycle. A lot was expected of the industrial sector, and although the companies largely came through with good reported organic revenue growth and EPS relative to expectations, more often than not the market reactions were negative. That was certainly true for 3M (MMM) which saw rare pricing weakness, minimal margin leverage, and comments from management indicating that price would be traded off for market share in the quarters to come.

3M wasn't undervalued going into earnings, and you could argue that it had been elevated to one of the “crown jewel” holdings in industrials (alongside names like Illinois Tool Works (NYSE:ITW) and Honeywell (HON), among other candidates). While none of what 3M revealed about the second quarter changes my long-term view, it's hard to argue this is a must-own given the implied total return and the option to go with (relatively) cheaper names like Danaher (DHR) or Fortive (FTV).

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3M Among The Crown Jewels With A Smudge

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