3M Company Valuation

Dear Reader,

3M Company, or simply 3M, the US based industrial, health care and consumer goods conglomerate, is valued at 111.07 billion USD on public markets.

I estimate that 3M's intrinsic value is 131 billion USD or 3M is around 20 % undervalued by investors currently.

3M has a quite high dividend yield of 3.09 %, net profit margin of regularly around 16 % which are both very attractive for institutional fund managers. In short, 3M has the proverbial moat or durable competitive advantage in the words of Warren Buffett. A problem is the low growth rate of 3M's revenue at around 1.5% a year and in recent years there have even been small single digits declines in revenue.

3M is trading at a Price/Earnings ratio of 19.56 which is high for slow growing industrial company, but due to 3M's business safety and high dividend this does not seem too excessive. 3M is actually quite similar to a government bond with its business diversification mix, stable net cash flows and low risk, but secure line of trade.

In short, I believe 3M is 20% undervalued, because more and more institutional investors will be attracted to staid, high-dividend yield, low risk, highly profitable businesses like 3M when the stock market bubble in technology stocks bursts, which I forecast could happen in the next 3 to 4 years on overvaluation and Federal Reserve raising interest rates levels scared off by rising inflation.

Even currently value stocks like 3M have been outperforming technology growth stocks. I forecast this trend to continue for the next 3 to 4 years.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich