3M's stock rises on earnings beat, improved guidance for year

[Prague, Czech republic - May 22, 2017: 3M company logo on headquarters building]
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Shares of 3M (NYSE:MMM [https://seekingalpha.com/symbol/MMM]) rose 1.3% in premarket trading Tuesday after the industrial conglomerate posted [https://seekingalpha.com/news/4505851-3m-non-gaap-eps-of-2_19-beats-by-0_12-revenue-of-6_3b-beats-by-50m] stronger-than-expected third-quarter earnings and revenue and raised its full-year profit forecast.

The company reported adjusted earnings of $2.19 per share, a 10% increase from a year ago and well ahead of Wall Street’s consensus of $2.07. Adjusted sales rose 4.1% to $6.3 billion, beating expectations of $6.25 billion. On a GAAP basis, total sales climbed 3.5% to $6.5 billion, with operating margin expanding to 22.2% from 20.9% a year earlier.

3M (NYSE:MMM [https://seekingalpha.com/symbol/MMM]) also lifted its 2025 adjusted earnings guidance to a range of $7.95 to $8.05 a share, up from $7.75 to $8.00, citing stronger organic growth and margin expansion.

“I am very pleased with our teams' focus on reinvigorating organic top-line growth and improving operational performance resulting in another strong quarter,” Chairman and Chief Executive William Brown said in a statement, adding that the company is on track to meet the goals outlined at its investor day earlier this year.

However, the company also reported weaker headline earnings and lingering concerns about legal exposures. GAAP earnings fell 38% year over year to $1.55 a share, weighed down by litigation-related expenses and losses from recent divestitures. The decline in statutory profit raised investor unease about the durability of 3M’s (MMM [https://seekingalpha.com/symbol/MMM]) turnaround, even as adjusted metrics improved.

The company’s operating cash flow totaled $1.8 billion, with adjusted free cash flow of $1.3 billion. 3M (MMM [https://seekingalpha.com/symbol/MMM]) returned $900 million to shareholders through dividends and share repurchases during the quarter.

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