3M (NYSE: MMM), the diversified industrial giant known for its wide range of products, including adhesives and personal protective equipment, is set to release its third-quarter 2024 earnings on October 22, before the market opens.As investors look forward to the results, analysts predict a challenging quarter for the company, with earnings and revenue expected to decline year over year. Here’s what investors need to know ahead of the report.
3M earnings expectations Analysts are projecting 3M’s earnings per share (EPS) at $1.90, reflecting a significant drop of about 28% compared to the same quarter last year.Meanwhile, revenue is expected to reach approximately $6.06 billion, marking a 24.5% year-over-year decline.This revenue decline is largely attributed to the recent spin-off of 3M’s Health Care business in April 2024, which has impacted the company’s year-over-year performance.Despite this drop, the EPS forecast shows slight optimism with a 0.5% upward revision over the past 60 days.However, 3M has missed Wall Street’s revenue expectations five times in the last two years, and analysts have become increasingly cautious, revising down their estimates in recent weeks.
3M’s peers have already reported their Q3 earningsLooking at the broader industrial machinery segment, some of 3M’s peers have already reported their Q3 earnings.For example, Snap-on saw flat year-on-year revenue but managed to beat expectations by 7.8%, while Worthington reported a 17.5% revenue decline, missing estimates by 13.1%.This mixed performance among peers suggests that 3M could face similar challenges.In terms of stock performance, the industrial machinery sector has seen positive investor sentiment, with stocks in the segment rising an average of 3.3% over the past month. 
Source: TradingViewHowever, 3M’s stock has remained relatively unchanged during this period, currently trading at around $135.09, with an average analyst price target of $137.50.
3M stock: rally and what’s nextDespite the expected decline in Q3 results, 3M’s stock has experienced a remarkable rally in 2024, becoming one of the top performers in the S&P 500.After hitting a low in 2023, the stock surged more than 105%, peaking at $140.70 earlier this year.However, this rally has stalled in recent weeks as investors brace for the upcoming earnings report.While a year-over-year decline in earnings is anticipated, there’s still hope for a potential earnings beat, which could positively influence the stock.3M has a history of surpassing earnings expectations, which could boost investor confidence and the stock price in the short term.
What to watch for in 3M’s Q3 earningsInvestors should keep an eye on management’s insights during the earnings call, particularly regarding the company’s strategy to navigate the ongoing challenges.With significant reliance on debt (3.38 debt-to-equity ratio) and a recent dip in revenues, 3M’s ability to maintain liquidity and stabilize its operations will be critical.The company’s valuation metrics, including a price-to-earnings (P/E) ratio of 79.36, suggest high market expectations for future growth.As 3M faces headwinds, particularly from the spin-off of its Health Care segment and the overall slowdown in industrial demand, the Q3 earnings report will offer important signals for the stock’s future direction.Investors are advised to stay cautious and closely monitor 3M’s performance in this upcoming release.More By This Author:Is There More Upside For Gold And Silver In Store? Crude Oil Prices Rise 1% But Bearish Sentiment Dominates Market USD/CAD Forms Double-Bottom, Golden Cross Ahead Of BoC Decision
