Will 3M (MMM) Disappoint This Earnings Season? - Analyst Blog
April 22 2014 - 11:50AM
Zacks
3M Company (MMM)
is scheduled to report first-quarter 2014 results before the
opening bell on Apr 24, 2014. In the last-reported quarter, 3M
delivered a positive earnings surprise of 2.50%. Let’s see how
things are shaping up for this quarter.
Factors to Consider This Quarter
3M, a diversified technology company, has consistently delivered
sustainable increases in revenues and earnings in the past few
quarters.
3M’s industrial segment, its primary growth driver, is expected to
contribute significantly to the top line. Operations in emerging
countries, especially China, are witnessing strengthening demand
and are likely to drive revenues. However, headwinds such as
macroeconomic pressures, adverse currency movements and competitive
pricing might weigh on earnings.
3M is in the process of realigning its portfolio by divesting
underperforming assets and investing in high-growth industries such
as aerospace, energy, and healthcare. The resultant cost reductions
and earnings accretion have the potential to boost earnings this
quarter. But rising raw material inflation and higher research and
development (R&D) expenses might be a drag on the bottom
line.
Earnings
Whispers?
Our proven model does not conclusively show that 3M is likely to
beat earnings this quarter as it does not have the right
combination of two key ingredients. That is because a stock needs
to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3
for this to happen. That is not the case here as you will see
below.
Zacks ESP: ESP or Expected Surprise Prediction,
which represents the difference between the Most Accurate estimate
and the Zacks Consensus Estimate, is -1.68%. That is because the
Most Accurate estimate stands at $1.76 while the Zacks Consensus
Estimate is higher at $1.79.
Zacks Rank #3 (Hold): 3M’s Zacks Rank #3 lowers
the predictive power of ESP because the Zacks Rank #3 when combined
with a negative ESP makes surprise prediction difficult.
Other Stocks to Consider
Here are other companies you may want to consider, as our model
shows that these have the right combination of elements to post an
earnings beat this season:
Alaska Air Group, Inc. (ALK), with earnings ESP of
+7.14% and a Zacks Rank #1 (Strong Buy).
Advanced Energy Industries, Inc. (AEIS), with
earnings ESP of +10.00% and a Zacks Rank #1.
Convergys Corporation (CVG), with earnings ESP of
+10.34% and a Zacks Rank #1.
ADV ENERGY INDS (AEIS): Free Stock Analysis Report
ALASKA AIR GRP (ALK): Free Stock Analysis Report
CONVERGYS CORP (CVG): Free Stock Analysis Report
3M CO (MMM): Free Stock Analysis Report
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