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3M Stock Falls 7% Due To Weak Forward Guidance

3M (MMM) has reported strong fourth-quarter financial results. However, the stock of the office supply and consumer goods company is down 7% after it announced weak forward guidance.

The Minnesota-based company, which is best known as the maker of post-it-notes, reported earnings per share (EPS) of $2.42 U.S. and revenue of $8 billion U.S.

The top and bottom-line numbers each beat Wall Street forecasts calling for EPS of $2.31 U.S. and revenue of $7.7 billion U.S.

For all of 2023, 3M announced EPS of $9.24 U.S., down from $9.88 U.S. a year earlier but better than management’s guidance of $9.05 U.S.

The company’s operating profit margin in Q4 came in at 21%, up two percentage points from a year ago, and free cash flow amounted to $6.3 billion U.S., exceeding analysts’ expectation of $4.90 billion U.S.

Despite the strong results, 3M issued forward guidance that disappointed analysts and investors, saying it expects EPS for all of 2024 to be $9.55 U.S.

Wall Street had penciled in $9.90 U.S. in 2024 EPS. However, 3M’s management team often provides conservative guidance.

Still, the company said that its sales are likely to grow only 1% to 3% this year. Sales growth has been a struggle for 3M, particularly in China where an economic slowdown is worsening.

3M also faces multiple lawsuits related to faulty earplugs it sold to the U.S. government and industrial chemicals that have been found in groundwater across America.

Later this year, 3M plans to spinoff its healthcare unit, which will be called “Solventum.”

Prior to today (Jan. 23), the stock of 3M had declined 12% over the past year and was trading at $108.02 U.S. per share.

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