Is it worth buy MMM ?

3M's stock (MMM) is not currently a strong buy. Here's why:

1. Dividend Yield and Payout Ratio: The dividend yield of 3M is 3.3% as of October 10, 2024, which is attractive. However, the payout ratio is -5.67%, which is negative and suggests that the company may not be generating enough free cash flow to sustain its dividend payments. A negative payout ratio could indicate that the company is paying out more than it is earning, which is a red flag for investors.

Kadar Dividen MMM (TTM)

2. Free Cash Flow: The free cash flow of 3M has been volatile, with a significant decline in the most recent quarter ending on Q2 2024, to -$5.99 billion. This indicates that the company may be struggling to generate sufficient cash to support its operations and dividend payments. Free cash flow is a critical metric for assessing a company's financial health and its ability to generate cash after capital expenditures.

Aliran tunai percuma MMM, aliran tunai percuma tahun ke tahun

3. Revenue Growth: The company has experienced a slight decline in revenue, with a total revenue YoY growth rate of -0.45% as of Q2 2024. This suggests that the company may be facing challenges in growing its top line, which could impact its long-term profitability and cash flow generation.

Jumlah hasil MMM tahun ke tahun, jumlah hasil

4. Net Profit Margin: The net profit margin has been declining, with a significant drop to -35.8% in Q2 2024. A declining net profit margin indicates that the company's expenses are growing faster than its revenues, which is a concerning trend for investors.

Margin keuntungan bersih MMM tahun ke tahun

5. Return on Equity (ROE): The ROE has been volatile, with a significant drop to -81.88% in Q3 2023, and then a recovery to 19.19% in Q1 2024. While the ROE has improved from a low point, it is still lower than the peak seen in the past, which could be a sign of reduced efficiency or increased risk.

MMM ROE (purata) YoY, ROE (purata)

6. Debt Levels: The debt-to-equity ratio has been increasing, with a high of 4.34 in Q2 2024, which suggests that the company is relying more on debt financing. A high debt level can increase financial risk and reduce the company's flexibility to respond to adverse economic conditions.

Nisbah hutang kepada ekuiti MMM, nisbah hutang kepada ekuiti tahun ke tahun

7. Return on Assets (ROA): The ROA is not available, which makes it difficult to assess the company's asset management efficiency. ROA is a crucial metric for understanding how effectively a company is using its assets to generate profits.

8. Stock Performance and Analyst Sentiments: The stock has experienced a significant surge of 45.6% in the last six months, which is impressive. However, the recent trading session shows a decline, and the stock is trading below its 52-week high. Additionally, the consensus rating is "Hold" with price targets ranging from $95 to $160, which suggests a lack of strong buy recommendations from analysts.
9. Legal and Regulatory Issues: The company has faced significant legal challenges, which have impacted its financial performance and investor sentiment. These issues could continue to affect the stock's performance in the future.
10. Dividend Cut: Despite the high dividend yield, the company has announced a dividend cut, which may be a sign of financial strain or a proactive measure to address sustainability concerns.

In conclusion, while 3M has a high dividend yield, there are several financial indicators and market factors that suggest caution. The negative free cash flow, declining net profit margin, and high debt levels are particularly concerning. Investors should also consider the legal and regulatory issues that may impact the stock's performance. Until there is a clear improvement in these areas, MMM may not be a compelling buy.