Episode
3M Stock: It Beat Earnings and RAISED Guidance — So Why We Say HOLD
- Published
- Jul 26, 2026
- Duration seconds
- 819
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Summary
3M Company (MMM) Q2 2026 — 3M (MMM), the Post-it and Scotch-tape industrial icon, reported a clean Q2 2026 adjusted beat: adjusted EPS of $2.40 topped the ~$2.27 estimate (+11% YoY) on sales of $6.5B with adjusted organic growth of 5.4%, and adjusted operating margin rose 40 bps to 24.9%. GAAP was messier — EPS of $1.78 and a 15.1% operating margin (down 290 bps), weighed by a divestiture loss and litigation costs. Management RAISED full-year adjusted EPS guidance to $8.80–$8.95 (from $8.50–$8.70). The stock (~$173, up ~24% off its $139 low) sits near its $177 52-week high. The catch: even our turnaround-leaning DCF lands fair value near $158 — below the price, before fully charging the multi-year PFAS and earplug cash bill. Our call: HOLD. 3M is one of the great American industrial turnarounds in progress — the Post-it, Scotch-tape and respirator maker that spent years as a litigation punching bag (PFAS, Combat Arms earplugs, tens of billions in settlements) and is now, under new CEO William Brown, quietly running well again. Q2 2026 was a clean adjusted beat: adjusted EPS of $2.40 beat the ~$2.27 estimate (+11% YoY), sales of $6.5B grew 5.4% organically, and adjusted operating margin expanded 40 bps to 24.9%. GAAP told a rougher story — EPS of $1.78 and a 15.1% operating margin, down 290 bps, dragged by a divestiture loss and litigation. Safety & Industrial led with +8.2% organic growth and a 27.8% margin; Transportation & Electronics rose ~5.9%; only Consumer lagged (-1.8%). Management RAISED full-year adjusted EPS guidance to $8.80–$8.95 (from $8.50–$8.70), with adjusted FCF of $1.3B and $1.4B returned to shareholders. So the debate isn't quality — it's price. The stock has re-rated ~24% off its $139 low to ~$173, near its $177 high, at ~19x forward earning…