3M (Hmm – Free Report) is one of the most searched stocks on Zacks.com these days. So it's worth looking at some facts that could shape the stock's performance in the short term.
Over the past month, the maker of post-it notes, industrial paints, and ceramics has seen its shares rise +2.8%. This compares to a +2.2% change in the Zacks S&P 500 Composite Index. During this period, the Zacks Diversified Business industry, which includes 3M, rose 2.8%. The key question here is: What is the future direction of the stock price?
While media reports and rumors about significant changes in a company's business outlook typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Essentially, we study how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so does the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
3M is expected to post earnings of $2.09 per share for the current quarter, representing a +6.1% change from the year-ago period. Over the past 30 days, the Zacks Consensus Estimate has changed -3.1%.
The consensus earnings estimate for the current fiscal year of $9.77 represents a +5.7% year-over-year change. This estimate has remained unchanged over the past 30 days.
Next year's consensus earnings estimate of $10.26 represents a +5.1% change from the earnings 3M was expected to report a year ago. Estimates have not changed over the past month.
The Zacks Rank, a proprietary stock evaluation tool with a strong, outside-audited track record, effectively harnesses the power of earnings estimate revisions to deliver a more definitive picture about near-term stock price direction. We provide. The magnitude of the recent change in consensus estimates, as well as three other factors related to earnings estimates, give 3M a Zacks Rank #3 (Hold).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
Earnings growth is arguably the best indicator of a company's financial health, but nothing will happen if a company can't grow its revenue. After all, it's nearly impossible for a company to increase profits over a long period of time without increasing revenue. Therefore, it's important to know a company's earnings growth potential.
3M's current quarter consensus revenue estimate is $7.77 billion, representing a -3.2% change from the year-ago period. Estimates for the current and next fiscal year are $32.52 billion and $33.23 billion, representing changes of -0.5% and +2.2%, respectively.
Last reported results and surprising details
3M reported revenue of $8.01 billion in its last reported quarter. This corresponds to a -0.8% year-over-year change. EPS for the same period was $2.42, compared to $2.28 in the year-ago period.
The reported earnings represent a surprise of +4.25% when compared to the Zacks Consensus Estimate of $7.69 billion. EPS surprise was +4.76%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has surpassed consensus revenue estimates every time during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock's current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects is a key determinant of future stock performance.
Compare the current value of a company's valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) categorizes stocks into five groups, ranging from A to F, with A being B and B is better than C). ), which can help you identify whether a stock is overvalued, fairly valued, or temporarily undervalued.
3M is rated B on this score, indicating that it trades at a discount to its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz about 3M is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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The company is a little-known chemical company, and despite a 65% increase over last year, it's still very cheap. With continued demand, soaring 2022 profit estimates and $1.5 billion in stock buybacks, retail investors could jump in at any time.
Does this company stack up against other stocks that have recently seen their Zacks stock double, like Boston Beer Company, which has soared +143.0% in less than 9 months, and NVIDIA, which has soared +175.9% in one year? , or may exceed.
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