I’ve been critical of 3M (NYSE:MMM) in the past regarding its M&A and repositioning decisions, and that criticism still applies – compared to how peers like Danaher (NYSE:DHR), Eaton (NYSE:ETN), Fortive (NYSE:FTV), Honeywell (NASDAQ:HON), and Parker Hannifin (NYSE:PH) have repositioned their businesses in recent years, I feel like 3M has missed out to the detriment of its shareholders. That said, for the here and now, I also feel that 3M isn’t really getting its due as a cyclically-sensitive multi-industrial with superior margins.
Up only about 10% since my last update, 3M shares have underperformed the broader industrial group by about 10%. Some of this can be tied to a general shift away from short-cycle names, but 3M is also a relatively unpopular name on the Street now, and it doesn’t fit the “growth over everything else” sensibility of many investors. I do believe the shares are undervalued today, though, and while 3M doesn’t offer the same story-stock leverage as names like Danaher, Eaton, or Honeywell, I do believe quality and undervaluation ought to be worth something.
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