Upon further analysis, we raise our 3M fair value estimate to $104 per share from $99 to account for Solventum’s “midnight dividend” of $7.7 billion to 3M, but mostly offset by other lost cash implications from Solventum’s prior contribution. At current market prices, as of April 4, 2024, of just over $90, this implies 3M trades at a roughly 12% discount to our revised fair value estimate.
3M continues to emphasize innovation and keeps competitors away with generous levels of R&D spending, which typically totals nearly 6% of net sales.
While 3M has earned returns that have doubled its cost of capital for over 25 years, returns have declined and innovation has stagnated.
|
Metric
|
MMM
|
PG
|
KMB
|
|---|---|---|---|
Price/Earnings (Normalized) | 9.85 | 24.59 | 19.06 |
Price/Book Value | 10.47 | 7.75 | 46.26 |
Price/Sales | 1.54 | 4.64 | 2.08 |
Price/Cash Flow | 7.93 | 19.42 | 14.38 |
|
Metric
|
MMM
|
PG
|
KMB
|
|---|---|---|---|
Quick Ratio | 0.71 | 0.40 | 0.47 |
Current Ratio | 1.07 | 0.64 | 0.82 |
Interest Coverage | −9.55 | 20.66 | 7.67 |
|
Metric
|
MMM
|
PG
|
KMB
|
|---|---|---|---|
Return on Assets (Normalized) | 10.56% | 13.58% | 12.65% |
Return on Equity (Normalized) | 54.15% | 35.76% | 331.30% |
Return on Invested Capital (Normalized) | 21.33% | 20.36% | 26.41% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
HON
| Honeywell International Inc | Cysvhjwsf | Hxfmd | $124.4 Bil | |
MSBHF
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MTSUY
| Mitsubishi Corp ADR (Unsponsored) | — | Blgrr | $91.6 Bil | |
HTHIF
| Hitachi Ltd | — | Xwdqdtk | $82.6 Bil | |
HTHIY
| Hitachi Ltd ADR | — | Nvqrpr | $82.6 Bil | |
MITSF
| Mitsui & Co Ltd | — | Cxcpt | $69.5 Bil | |
MITSY
| Mitsui & Co Ltd ADR | — | Lgk | $69.5 Bil | |
ITOCF
| ITOCHU Corp | — | Ptmkg | $62.0 Bil | |
KYOCY
| Kyocera Corp ADR | Dzpzkkdc | Stdj | $17.6 Bil |
