Is 3M Stock a Buy?
With earnings season underway, I thought it's time to address the question of whether it's a good idea to buy 3M (NYSE: MMM) stock right now. The stock's 5.6% dividend yield and its potential to improve profit margins via its restructuring initiative attract investors, but is it enough to offset concerns over its future capital-allocation policy and end markets in 2024? Here's what you need to know before buying the stock.
The best case rests on the idea that 3M is now a deep-value stock with turnaround prospects. In other words, with the stock trading on just 13 times the estimated 2023 earnings and yielding 5.6%, investors are entitled to feel that simply executing its restructuring initiatives will be enough to take the stock materially higher.
The initiatives should result in higher profit margins and, as a large diversified 3M, should be able to generate revenue growth in the low-single digits (in line with economic growth) in 2024. The result will be the kind of high-single-digit growth in earnings Wall Street expects from 3M in 2024. That's fine for a company yielding significantly more than the 10-year Treasury rate of slightly less than 4%.
Source Fool.com
