Will 3M stock be around in 3 years?

3M (NYSE: MMM) rather than an accurate inventory of dividends for conservative investors. The diverse conglomerate sold a huge range of business, security and personal items and was once the dividend king, raising its dividends continuously for over 50 years. Or it is no longer in addition to that inside S&P 500 since the inception of the index in 1957.

Still, at some point over the past three years, 3M stock is down about 12% as the S&P 500 is up 25%. He struggled with grueling sales and faced grueling recalls and complaints. Additionally, it exited the Dividend King Club in 2024 after suspending its payout and spinning off its health unit as Solventum (NYSE: SOLV). Let’s see if this unloved inventory can bounce off support over the next three years.

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Image supply: 3M.

What happened to 3M at some stage in the last three years?

3M sells more than 60,000 products, including adhesives, abrasives, laminates, fire protection products, personal protective equipment, select films, insulation products, automotive care products and digital circuits. Its high manufacturers include Scotch Tape, Scotchguard protectives, Put up-It notes and Nexcare bandages. 3M grew with healthy support in 2021, but its organic sales growth slowed dramatically in 2022 and 2023 as its operating margins fell.

Plate stock: 3M.

The expansion of his security and industrial, transportation and electronic and personal businesses has stalled as he grappled with inflation, high passion costs, geopolitical conflicts and various macro international headwinds. A corresponding shining position used to be its healthcare segment, now called Solventum.

As 3M struggled to develop, it was sometimes plagued by hundreds of complaints over its production and disposal of PFAS (perfluoroalkyl and polyfluoroalkyl substances), which might be better known as “no-sight chemicals.” 3M has already agreed to pay $14 billion in PFAS settlements up to that level, but the collateral is huge AIG (NYSE: AIG) stopped suing 3M not too long ago and refuses to blanket any of these funds. In addition, 3M must pay any other $6 billion settlement from 2023 to 2029 related to the recall of its contaminated earplugs.

All of these lawsuits cast dark clouds over 3M’s future, as it ended its most recent quarter with a damaging operating cash flow of $1.8 billion, $11.3 billion in long-term debt and an ethical $7.3 billion in cash, cash equivalents, and marketable securities on its stability sheet. So at some level it has underperformed the market by that kind of margin over the last three years.

What will happen to 3M in the next three years?

Finally, it could be that 3M brought in a recent CEO, Bill Brown, to stabilize its faltering changes. Under Brown, 3M plans to shift some of its older products to soon-to-be retired markets, eliminate viable mergers or acquisitions, and streamline its research and development spending. In addition, it is working to increase its current chain recognition to include far from more expensive quality, guard against interference.

These will be steps within the framework of ethical conduct, but 3M expects its adjusted organic sales to increase by about 1% in 2024 as its adjusted profit per unit (which includes its Solventum mosey-off but excludes ongoing litigation costs) decreased by 21%. to 22%. Therefore, it is necessary to rob at least a few more years for these turnaround efforts to bear visible fruit.

At $131, 3M stock may also seem cheap at 17 times forward adjusted earnings. Still, it’s undoubtedly trading at such a high rate because its improvement is anemic, its brand has been tarnished by serious security and ethical lapses, and its turnaround plans are unclear. Additionally, its forward dividend yield of 2.1% may no longer encourage income investors in this high-passion market.

So, while 3M is no longer doomed, I predict it will underperform the S&P 500 and many of its industry peers over the next three years. There simply aren’t enough compelling reasons yet to rob a chance on this burned-out blue chip inventory.

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Leo Solar has no problem with any of the stocks mentioned. The Motley Fool has positions and recommends 3M. The Motley Fool recommends Solventum. The Motley Fool has disclosure protections.

The views and opinions expressed herein are those of the author and separately do not necessarily reflect those of Nasdaq, Inc.