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3M Shares Rally Over 5% As Faster Electronics Demand Recovery and Raised Outlook

Wallstreet InsightTuesday, Oct 22, 2024 8:34 am ET

1min read

3M shares surged more than 5% as the company raised the lower end of its full-year adjusted profit forecast on Tuesday. Strong demand for its electronics and industrial products helped the U.S. conglomerate beat quarterly profit estimates.

Highlights:

Adjusted Sales: $6.1 billion with organic growth up 1.0% year-over-year.

Adjusted EPS: $1.98, up 18% year-over-year.

Free Cash Flow: $1.5 billion with a conversion rate of 141%.

The industrial company raised the lower end of its full-year adjusted profit forecast, with adjusted EPS from continuing operations now expected to be between $7.20 and $7.30, up from the previous range of $7.00 to $7.30.

"The 3M team delivered another quarter of strong operational execution, resulting in a double-digit increase in adjusted earnings along with solid adjusted free cash flow generation," said William Brown, 3M Chief Executive Officer. "Our ongoing execution positions us well to deliver a strong finish to the year. I am confident that our work on advancing our three priorities – organic growth, operational excellence, and capital deployment – will deliver long-term value creation for our shareholders."

Segment Performance:

Transportation & Electronics contributed the most growth in the third quarter, with organic sales of $1.91 billion, up 2% year-over-year, largely due to increases in electronics and advanced materials.

Safety and Industrial: Organic growth increased by 0.9% from a year earlier, reaching $2.76 billion. This segment includes adhesives for industrial use.

Consumer Segment: Sales saw an organic decline of 0.7%, due to decreases in home & auto care, packaging & expression, and consumer safety & well-being. Consumers remain cautious in their spending due to the tight interest rate environment.

The broader industrial sector is expected to benefit from a boost in consumer spending after the U.S. Federal Reserve cut borrowing costs in September, according to analysts.

Overall, 3M's stock has seen almost a 52% increase this year.

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