What's In The Offing For 3M Company (MMM) In Q1 Earnings?
Zacks Investment Research | Apr 19, 2018 11:50PM ET
3M Company (NYSE:MMM) is scheduled to report first-quarter 2018 results on Apr 24, before the opening bell.
The company has a decent earnings history, surpassing estimates thrice in the trailing four quarters, with an average positive surprise of 3.2%. Last quarter, the company reported earnings of $2.10, delivering a beat of 3.5%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
3M enjoys diversified product portfolio. However, the company’s growth initiatives are largely dependent on timing and market acceptances of its product offerings that include 3M’s ability to frequently renew its pipeline of new offerings and bring those to market at acceptable price points. Also, the company has to manage commodity price risks through negotiated supply contracts, price protection agreements and forward physical contracts.
Moreover, the company’s global presence makes it susceptible to tremendous local competitive pressure, particularly in Brazil, China, India and Indonesia. In order to survive the stiff competitive environment, 3M has to locally develop, manufacture, hire and purchase. These, in turn, are likely to reduce its profitability to some extent due to continuous investments in value drivers that act as a hedge against stiff competition.
Given 3M’s international presence, adverse foreign currency translations might affect its net investment in foreign subsidiaries and cause instability in cash flows related to foreign denominated transactions moving ahead. These undermine the company’s long-term growth potential to some extent. Additionally, 3M is facing increased pension expenses of late. The related extra costs are likely to be a drag on the company’s bottom line in the impending quarter as well.
However, the Zacks Consensus Estimate for first-quarter revenues from the Industrial segment (which constitutes a major portion of 3M’s total revenues) remains high at $2,883 million, reflecting growth of 6.4% year over year. Also, the company’s portfolio restructuring efforts by divesting assets bode well for its growth.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for 3M this time around. This is because a stock needs to have both a positive Zacks Investment Research
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