3M (MMM) is set to announce fourth quarter earnings on Tuesday, and investors will watch out for the company’s sales growth, margin expansions, and 2026 guidance amid a muted macro environment.
Wall Street expects the Post-it maker to post an EPS of $1.80, a 7.1% year-over-year increase, while revenue is expected to rise 3.6% to $6.01B during the quarter.
3M’s CEO & Chairman William Brown, during the Q3 earnings call, raised FY EPS guidance to a range of $7.95 to $8.05 from $7.75 to $8.00. He also updated margin expansion expectations to 180-200 basis points for the year and sales growth of over 2%.
Seeking Alpha analyst William Davis rated the stock a Buy, saying that 3M is executing a turnaround, leveraging restructuring and operational improvements to drive margin expansion and organic growth.
“Despite sluggish top-line growth and legal headwinds, MMM’s superior margins, robust cash flow, and stable financial base support a bullish outlook,” Davis added.
In the past year, 3M shares gained over 24%, outperforming the broader S&P 500 Index, which gained nearly 17% during the same period.
Seeking Alpha’s Quant and analysts recommended the stock as a Hold, while the Wall Street analysts rated the company as a Buy.
However, JP Morgan downgraded 3M to Neutral from Overweight, saying the brokerage firm is cautious heading into the quarter as it believes the exit rate on revenue growth could be a disappointment coming away.
“3M’s hands are relatively tied in terms of capital allocation to drive above-average EPS growth given PFAS, and if they start doing dilutive divestitures (recall another 10% of the portfolio is considered ‘non-core’ with 2-3% being divested in pieces), that would be further downside to EPS growth,” JP Morgan analyst C. Stephen Tusa said, setting a price target of $182.
Over the last two years, MMM has beaten EPS estimates 100% of the time and has beaten revenue estimates 75% of the time.
Over the last three months, EPS estimates have seen two upward revisions against 10 downward revisions, while revenue estimates have seen six upward revisions versus four downward moves.