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3M (MMM): Checking the Valuation After a 30% Rally and Margin Improvement Hopes

Simply Wall St · 2d ago

3M (MMM) has quietly outperformed over the past year, with the stock up roughly 30% while posting improving revenue and double digit earnings growth. That combination is drawing fresh investor attention.

See our latest analysis for 3M.

With the share price now around $165.09 and a strong year to date share price return of 27.29%, momentum still looks constructive, especially alongside a nearly 30% one year total shareholder return that hints investors are re-rating 3M as execution improves.

If 3M’s turnaround has you rethinking industrial names, it might be worth exploring fast growing stocks with high insider ownership to see what other under the radar compounders are quietly building momentum.

But after a 30% rally, a richer valuation, and only modest top line growth, are investors still getting 3M at a discount to its true earnings power, or is the market already pricing in the full turnaround?

Most Popular Narrative Narrative: 5.6% Undervalued

Compared with the last close at $165.09, the most widely followed narrative sees 3M’s fair value a little higher, hinting at modest upside if execution holds.

Significant operational efficiency gains, such as improved on-time delivery, increased equipment effectiveness, quality cost reductions, and supply chain/process consolidation, are driving structurally higher operating margins and earnings benefits expected to compound as further optimization and automation are rolled out company wide.

Read the complete narrative.

Want to see the math behind this optimistic tilt? The narrative leans heavily on slow and steady revenue gains and a powerful profit margin reset. Curious how those assumptions combine with a premium future earnings multiple to support today’s higher fair value band? Dive in to unpack the full roadmap behind that price.

Result: Fair Value of $174.94 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unresolved PFAS litigation and softer demand in key industrial end markets could quickly challenge today’s optimism around 3M’s margin reset and valuation.

Find out about the key risks to this 3M narrative.

Build Your Own 3M Narrative

If this outlook does not quite fit your view, or you prefer digging into the numbers yourself, you can build a custom thesis in minutes: Do it your way.

A great starting point for your 3M research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more high conviction investment ideas?

Before you move on, consider reviewing a few fresh leads from our screeners so you do not miss the next wave of market beating opportunities.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.