3M Third Quarter Earnings

By Investopedia Staff | October 23, 2012 AAA

3M Company (NYSE:MMM) announced its results for the third quarter on October 23, 2012. 3M is a global manufacturer, technology innovator, and marketer of a variety of products.

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: How To Decode A Company's Earnings Reports

The Numbers: 3M's EPS fell in line with analyst expectations of $1.65 per share while revenue of $7.5 billion missed estimates of $7.79 billion. EPS rose 8.6% while revenue declined 0.4% from the same period last year. Revenue declined last quarter after shrinking 1.9% to $7.53 billion in the second quarter. The company's net income for the quarter was $1.16 billion. According to the reported number, this is up 6.6% from last year's figures. Last quarter marked the third in a row of rising net income.

Management Quote: "The 3M team delivered another strong operating performance in the third quarter," said Inge G. Thulin, 3M chairman, president and chief executive officer. "In the face of the current slow-growth economy, our businesses continued to grow organically and generated record profitability. All six of our businesses posted 21 percent-plus operating margins in the quarter, so we continue to execute well in 2012."

A Look Back: Net income has increased 2.5% year-over-year on average across the last five quarters. The biggest gain came in the most recent quarter, when income climbed 6.6% from the year-earlier quarter.

Looking Ahead: Expectations for the company's next-quarter performance are higher than they were 90 days ago. Over the past three months, the average estimate for the fourth quarter has risen to $1.67 per share from $1.65. Increasing earnings estimate is a positive sign about the company and it typically leads a increase in the stock price. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. For the fiscal year, the average estimate has moved up from $6.30 a share to $6.41 over the last ninety days.

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