3M is an American conglomerate operating in industry, healthcare, and consumer goods. The analyst recommends holding current shares due to 3M's name recognition and diversified products, though the share price is expected to decline over 5 years. Pros include proprietary technology and a 3.07% dividend yield. Cons potentially include regulatory proceedings, fluctuations in future results, and security breaches.

1. Senior Analyst
Matthew Drager
Analysts
Tomás Valladares
Osvaldo Villarreal

2. Table of Contents
I. Investment Thesis
II. Company Overview
III. Industry Overview
IV. Valuation
V. Appendix
3M

3. Investment Thesis: 3M (NYSE/MMM)
3M
The 3M Company is an American multinational conglomerate corporation operating in
the fields of industry, worker safety, US health care, and consumer goods.
Recommendation: Hold Current Price: $198.83
Target Price: $178.92
Investment Thesis
After analyzing 3M thoroughly, we
suggest holding the current
number of shares in SIG’s
portfolio. We believe that the
share price is going to decline
over the next five years but their
dividend yield of 3.07% pushes
us towards a hold valuation.
Pros
● Name recognition
● Diversified product line
● Proprietary technology information
Cons
● Potential regulatory proceedings
● Future results are subject to fluctuations
● Security breaches in their information
technology

4. Company Overview
● Founded in 1902
● Initial Public Offering (IPO) in 1946
● Fortune 500 company
● 44 Domestic locations
● 90 International locations
● Continuously paid dividends since 1916
● More than 118,000 patents
3M Headquarters in Saint Paul, MN

5. Business Model
● 3M is a manufacturing company that offers a diverse range of products.
● Their top industries include: Chemicals, Healthcare, Industrial, Consumer
Discretionary.
● Notable suppliers include Nippon Shokubai Co, PQ Group Holdings, Hirata
Corp, LI & Fung Ltd, and CIRCOR International.
● Notable Customers include Walmart, Lowe’s, McKesson Corp, and CVS.

6. Industries and Sectors
Industries/Sectors (BICS)
● Consumer Discretionary
○ Office Supplies
● Healthcare
○ Healthcare Supplies
● Industrial
○ Tools
● Chemical
○ Specialty Chemicals
Our Focus (GICS)
● Industrials

7. Revenue Breakdown
Industry (BICS) Revenue
Revenue
Percentage
● Materials 14.25 billion 41.5%
● Industrials 7.5 billion 21.1%
● Healthcare 7.25 billion 21.9%
● Consumer
Discretionary
5.5 billion 15.6%
Industry (GICS) Revenue
Industrials 34.5 billion

8. Geographical Presence
2017 2018 2019 2020
Asia Pacific $9,809 $10,254 $9,796 $9,569
Europe, Middle
East & Africa
$6,456 $6,654 $6,226 $6,109
Latin America &
Canada
$3,033 $3,024 $2,965
United States $12,372 $12,840 $13,159 $16,525

9. Industry Outlook
● Abrasive sandpaper manufacturing is forecasted to increase an annualized 4.0%
to $4.9B over the next five years to 2025.
● As emerging economies expand their industrial capabilities and developing
countries demand more durable goods, industry exports will likely continue to
trend upward
○ The value of industry exports is expected to increase an annualized 6.5% to
$1.1 billion over the five years to 2025.

10. Competitor Comparison

11. Competitor Comparison
3M Competitors (Global Industry Classification Standard)
Company GM
O. I.
Margin: Y
Dvd P/O: Y EBITDA: Y CFO: Y CF Growth: Y FCF: Y OpEx: Y EPS: Y
MEDIAN 34.17% 13.12% 58.40% 7.89 B 7.16 B -0.67% 5.96 B 13.05 B 6.20
3M (MMM) 48.74% 21.87% 63.09% 9.30 B 8.11 B 14.75% 6.61 B 8.42 B 9.32
General Electric (GE) 18.36% -19.53% 6.54% -8.79 B 3.60 B -58.99% 345.00 M 19.72 B 0.58
Honeywell (HON) 33.02% 18.40% 53.71% 7.22 B 6.21 B -9.99% 5.30 B 4.77 B 6.79
Siemens (SIE GR) 35.33% 7.84% 67.96% 8.55 B 9.00 B 8.64% 7.26 B 17.67 B 5.60

12. Profitability
Profit
Margin
ROA ROIC ROE
Median -0.67% 6.02% 7.79% 18.15%
MMM 14.75% 11.31% 17.14% 44.42%
General Electric -58.99% 0.31% -4.41% -2.23%
Honeywell -9.99% 8.99% 11.13% 26.84%
Siemens Ag-Reg 8.64% 3.05% 4.45% 9.47%

13. Efficiency
Inventory
Turnover
Total Asset
Turnover
Fixed Asset
Turnover
Median 3.95 0.47 4.12
MMM 3.97 0.7 3.14
General Electric 3.93 0.31 1.76
Honeywell 4.98 0.53 5.29
Siemens Ag-Reg 3.27 0.42 5.09

14. Liquidity
Current
Ratio
Quick
Ratio
Debt/
Equity
Median 1.56 1.09 1.42
MMM 1.89 1.23 1.53
General Electric 1.58 1.10 2.11
Honeywell 1.47 0.09 1.30
Siemens Ag-Reg 1.55 1.08 1.19

15. Driving Forces
● Less companies are entering the industries of Industrials and Materials.
● With everything opening up from the pandemic, the demand for supplies will increase.
Large companies have higher bargaining of suppliers.
● 3M's name helps them remain a leader despite the amount of sub products.
● 3M has an advantage in market power in the industry sector. They're a household name
in cleaning products and manufacturing.
● Bigger companies like 3M tend to have easier access to raw resources from mines,
quarries, etc.

16. SWOT Analysis
• Strengths
Dominate the office supply industry with 27% market share
Necessary products
Trusted by consumers
Having a well established brand name
• Opportunities
The industrial Protection Index is expected to increase leading to potential
opportunities in the protective eyewear industry.
Adhesive manufacturing industry is expected to grow 4.6% to 18.6 billion in
2025
Biden has proposed a $2 trillion infrastructure plan
• Weaknesses
Lack in Special Chemical industry with 3% market share
Higher price points than competitors
Fall behind Henkel Ag in Adhesive manufacturing 11.9% vs 9.1% MS
Sandpaper revenue growth for the industry is expected to decline in the next
5 years.
• Threats
Most industries 3m is involved in have high barriers to entry.

17. Valuation
3M

18. Weighted Average Cost of Capital

19. Historical Metrics
Revenue

20. Historical Metrics
Profit Margins

21. Historical Metrics
Share Price

22. Historical Metrics
Return on Invested Capital

23. Historical Metrics
Avg. Dividend Yield (10Y)

24. Investment Thesis: 3M (NYSE/MMM)
3M
The 3M Company is an American multinational conglomerate corporation operating in
the fields of industry, worker safety, US health care, and consumer goods.
Recommendation: Hold Current Price: $198.83
Target Price: $178.92
Investment Thesis
After analyzing 3M thoroughly, we
suggest holding the current
number of shares in SIG’s
portfolio. We believe that the
share price is going to decline
over the next five years but their
dividend yield of 3.07% pushes
us towards a hold valuation.
Pros
● Name recognition
● Diversified product line
● Proprietary technology information
Cons
● Potential regulatory proceedings
● Future results are subject to fluctuations
● Security breaches in their information
technology

25. Appendix

26. Income Statement

27. Balance Sheet
Assets
• Content

28. Balance Sheet
Liabilities & Shareholders Equity

29. Balance Sheet
Liabilities & Shareholders Equity

30. Balance Sheet
Statement of Cash Flows

31. Balance Sheet
Statement of Cash Flows

32. DCF
Balance Sheet & Other Data

33. DCF
Free Cash Flow Buildup

34. DCF
Weighted Average Cost of Capital

35. DCF
Equity Valuation Range

36. Questions?