3M Grinding Through The Downturn

The Street was definitely disappointed with 3M's (MMM) results and guidance, as the company was a notable weak link in a chain of multi-industrial earnings that thus far haven't been as bad as feared. I see this as a good news/bad news situation. I believe 3M is a little further along within the downturn than many of its peers, and in that respect, I consider 3M's results something of a preview for what the multi-industrials may see in the next quarter. I also believe that 3M may be one of the earlier companies to pull out of the downturn.

3M is still a mixed investment prospect, even though I continue to own the shares. On one hand, I still like the company's broad exposure to a wide range of industrial end-markets and geographies, as well as structurally strong margins. On the other hand, I don't like the weakening margin leverage, the questionable M&A choices, and the lack of investment in growth markets. I do believe the shares have fallen to a point where they trade below long-term DCF-based fair value, and that's not a common occurrence, making this a name to consider for more patient investors.

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3M Grinding Through The Downturn