A Closer Look at 3M
It may not be a pound-the-table bargain, but we like it as a defensive stock.
3M (MMM) recently completed its acquisition of Acelity, which at an enterprise value of $6.7 billion represents the largest acquisition the company has ever made. We took this opportunity to revisit our assumptions and scrutinize each of 3M’s divisions after its resegmentation from five to four segments earlier this year. We have reduced our fair value estimate to $177 per share from $188 and raised our uncertainty rating to medium from low. We’re retaining our wide moat, stable trend, and exemplary stewardship ratings.
Even after increasing since the deal’s close, the stock still trades at a discount to what we consider its intrinsic value in a diversified industrial space with few bargains (we note that our 5-star price is about $124). As a GDP-plus business, 3M doesn’t offer much in the way of top-line growth. Even so, with speculation regarding an upcoming recession, we like 3M as a defensive stock.
Joshua Aguilar does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.