3M Third Quarter Earnings Preview

On Tuesday, October 23, 2012, 3M (NYSE:MMM) will report its third quarter earnings.



In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Everything Investors Need To Know About Earnings

What to Expect: The consensus estimate for 3M's earnings is $1.66 per share, up 9.2% from a year ago when the company reported earnings of $1.52 per share.

The consensus estimate, while unchanged in the past month, is down from $1.67 three months ago. For the fiscal year, analysts are expecting earnings of $6.42 per share.

3M is expected to report revenue of $7.85 billion for the quarter, beating last year's figure of $7.53 billion by 4.2%. The anticipated revenue for the fiscal year is $30.71 billion.



Company Performance: Revenue fell year-over-year in the second quarter to end a three-quarter growth streak. It fell 1.9% in the second quarter after rising 2.4%in the first quarter, 5.7% in the fourth quarter of the last fiscal year and 9.6% in the third quarter of the last fiscal year.

MMM has a P/E ratio of 15.5, in line with the industry average. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Investment Valuation Ratios: Price/Earnings Ratio



The stock price has risen from $89.99 on July 20, 2012 to $94.81 over the past quarter. 3M's best recent streak was when its price gained $2.95 per share between September 28, 2012 and October 8, 2012.