Risk Free Rate 3% Market Return 8% ERP = Market return - Rf = 5% Perpetuity Growth Rates Dividend Growth Rate 3% OFCFF Growth Rate 3% FCFE Growth Rate 3% O Tax rate 21%.3M COMPANY NYSE- MMM RECENT T149.47 RATIO 14.8 (Median: 19.0) PIE RATIO 0.83 iLD' 4.0% VALUE PRICE LINE TIMELINESS 4 Lowered 6/18/21 High: 98.2 95.5 140.4 168.2 170.5 182.3 244.2 2 259.8 219.8 182.5 209.0 181.8 Low: 94.0 Target Price Range 68.6 82.0 123.6 134.0 134.6 173.5 176.9 150.6 114.0 163.4 139.7 SAFETY 1 2025 |2026 2027 LEGENDS 15.0 x "Cash Flow" p sh TECHNICAL 4 Lowered 4/1/22 Relative Price Strength 400 Options: Yes -320 BETA .95 (1.00 = Market) Shaded area indicates recession 18-Month Target Price Range .200 Low-High Midpoint (% to Mid) 160 $148-$222 $185 (25%) 120 - 100 2025-27 PROJECTIONS -80 Ann'l Total -60 Price Gain Return High 270 (+80%) 19% Low 220 (+45%) 14% -40 % TOT. RETURN 2/22 Institutional Decisions THIS VL ARITH.' 2Q2021 302021 4Q2021 Percent STOCK INDEX 986 6.9 to Buy 1083 1064 S shares 1 yr. -11.7 to Sell 86 920 1004 traded ON 3 yr -20.7 49.6 HId's(000) 389012 386814 382979 5 yr. -7.2 71.1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 VALUE LINE PUB. LLC 25-27 31.21 34.49 36.43 32.54 37.45 42.61 43.52 46.54 50.10 49.68 50.46 53.22 56.83 55.87 55.71 61.83 64.05 67.50 Sales per sh 78.50 6.71 7.29 6.65 6.12 7.43 7.94 8.34 9.09 10.02 10.29 10.93 12.04 13.00 12.02 12.11 13.70 14.05 14.80 "Cash Flow" per sh 18.05 5.06 5.60 4.89 4.52 5.75 5.96 6.32 6.72 7.49 7.58 8.16 9.17 9.98 9.10 8.73 10.12 10.40 11.00 Earnings per sh A 13.70 1.84 1.92 2.00 2.04 2.10 2.20 2.36 2.54 3.42 4.10 4.44 4.70 5.44 5.76 5.88 5.92 6.40 6.84 Div'ds Decl'd per sh B= 8.00 1.59 2.01 2.12 1.27 1.53 1.98 2.16 2.51 2.35 2.40 2.38 2.31 2.74 2.95 2.60 2.80 2.85 2.95 Cap'l Spending per sh 3.50 13.56 16.56 14.24 17.96 22.00 22.19 25.58 26.39 20.64 19.21 17.26 19.44 16.99 17.50 22.27 26.44 29.80 31.70 Book Value per sh 41.60 734.36 709.16 693.54 710.60 711.98 694.97 687.09 663.30 635.13 609.33 596.73 594.88 576.58 575.19 577.75 571.85 570.00 560.00 Common Shs Outst'g C 535.00 15.2 15.0 14.6 14.1 14.5 14.5 14.1 17.0 19.1 20.6 20.6 22.3 21.1 19.8 18.3 19.0 Bold figures are Avg Ann'l P/E Ratio 18.0 .82 .80 .94 .92 .91 .90 .96 1.01 1.04 1.08 1.12 1.14 1.05 .94 1.00 Value Line Relative P/E Ratio 1.0 2.4% 2.3% 2.8% 3.2% 2.5% 2.5% 2.7% 2.2% 2.4% 2.6% 2.6% 2.3% 2.6% 3.2% 3.7% 3.2% estimates Avg Ann'l Div'd Yield 3.3% CAPITAL STRUCTURE as of 12/31/2 29904 30871 31821 30274 30109 31657 32 32765 32136 32184 35355 36500 37800 Sales ($mill) 42000 26.0% 26.0% 26.8% 27.7% 28.9% 29.6% 28.4% 26.7% 28.8% 26.3% 26.5% 27.0% Operating Margin 28.5% Total Debt $17363 mill. Due in 5 Yrs $7593 mill. 1288.0 1371.0 1408.0 1435.0 1474.0 1544.0 1488.0 1593.0 1911.0 1915.0 1950 2025 Depreciation ($mill) 2250 LT Debt $16056 mill. LT Interest $449.0 mill. (52% of Capital) 4444.0 4659.0 4956.0 4833.0 5050.0 5620.0 6006.0 5321.0 5088.0 5921.0 6050 6250 Net Profit ($mill) 7400 29.0% 28.1% 28.9% 29.0% 28.3% 25.4% 20.9% 19.6% 20.3% 17.8% 1 19.5% 20.5% Income Tax Rate 23.0% Leases, Uncapitalized: Annual rentals $280 mill. 14.9% 15.1% 15.6% 16.0% 16.8% 17.8% 18.3% 16.6% 15.8% 16.7% 16.6% 16.5% Net Profit Margin 17.6% Pension Assets-12/21 $25.0 bill. Oblig. $26.1 bill. 7430.0 5235.0 5767.0 3868.0 5507.0 6590.0 6465.0 3749.0 7034.0 6368.0 6100 4750 Working Cap'l ($mill) 3500 1916.0 4326.0 6731.0 8799.0 10723 12156 13486 17629 18082 16056 15500 15000 Long-Term Debt ($mill) 14000 Preferred Stock None Common Stock 571,845,478 million shares 17575 17502 13109 11708 10298 11563 9796.0 10063 12867 15117 17000 17750 Shr. Equity ($mill) 22250 20.1% 21.6% 25.3% 23.9% 24.4% 24.3% 26.4% 19.8% 17.2% 19.3% 19.0% 19.0% Return on Total Cap'l 20.5% MARKET CAP: $85.5 billion (Large Cap) 25.3% 26.6% 37.8% 41.3% 49.0% 48.6% 61.3% 52.9% 39.5% 39.2% 35.5% 35.0% Return on Shr. Equity 33.5% CURRENT POSITION 2019 2020 12/31/21 16.0% 16.7% 20.9% 19.4% 23.0% 24.4% 28.7% 19.9% 13.2% 13.1% 14.0% 13.5% Retained to Com Eq 14.0% ($MILL.) 37% 37% 45% 53% 53% 50% 53% 62% 67% 58% 60% 62% All Div'ds to Net Prof 58% Cash Asset 2451 5038 4765 Receivables 479 4705 4660 BUSINESS: 3M Company is a diversified manufacturer and tech- Dual Credit was a 6.2% drag. 2021 R&D: $2.0 billion or 5.6% o Inventory (FIFO) 4134 1595 1000 4985 other 993 nology company with operations in more than 70 countries. It is sales. Employs about 95,000. Officers & directors own less than Current Assets 12971 14982 15403 among the leading manufacturers in many of the markets it serves. 1.0% of common stock outstanding; Vanguard Group, 8.7%; Black- Accts Payable 228 2561 2994 The conglomerate currently operates four business segments: Rock, 7.3%; State Street, 5.4% (3/22 proxy). CEO: Michael F. Debt Due 2795 1307 Safety and Industrial (36.4%); Transportation and Electronics Roman. Chairman: Inge G. Thulin. Inc.: DE. Address: 3M Center, diner 4199 4581 473 (27.6%); Health Care (25.6%); Consumer (16.6%). Elimination of St. Paul, MN 55144. Tel.: 651-733-1110. Internet: www.3m.com Current Liab. 9222 7948 9035 3M closed 2021 in somewhat difficult ary conditions continuing to be a problem ANNUAL RATES Past Past Est'd '18-'20 fashion. Total sales rose just 0.3% year The Federal Reserve's decision to raise in- of change (per sh) 10 Yrs. 5 Yrs. to '25-'27 Sales terest rates and Russia's attack on Uk- 4.5%% 3.0 %% 5.0% over year, to $8.612 billion, for the Decem- "Cash Flow" 6.59% 5.0% 5.5% ber quarter as the top line was pressured raine only make matters worse. All told, Earnings 6.5% 5.0% 5.5% by tough year-earlier comparisons, supply- we now see 3M posting EPS of $10.40, Dividend 1.0% 1.0% 5.0% Book Value 0.5% -3.0% 12.0% chain constraints, and ongoing inflation- down a dime from our earlier assumption. ary headwinds. Looking at things closer, On top of the abovementioned hurdles, Cal- QUARTERLY SALES ($ mill.) Full sales declined at the Safety and Industrial margins are likely to be further pinched by endar Mar.31 Jun.30 Sep.30 Dec.31 Year and Transportation and Electronics seg- recently announced initiatives. 2019 7863 8171 7991 8111 32136 ments and were up just only 0.7% at Growth should pick up next year. Al- 2040 8075 7176 8350 8583 32184 Health Care. The Consumer business, though the top line is expected to increase 2021 8851 8950 8942 8612 35355 however, notched a 4.1% advance. From a at another low single-digit rate, we are 2022 8950 9100 9200 9250 36500 9400 9500 37800 bottom-line standpoint, the company modeling for noticeable margin improve- 2023 9300 9600 EARNINGS PER SHARE A earned $2.31 a share, well ahead of our ex- ment, banking on leadership's ability to Cal- Full pectation, but down $0.07 from the circumvent any lingering headwinds, endar Mar.31 Jun.30 Sep.30 Dec.31 Year 2019 previous-year mark. A lower tax rate and whether via cost cutting or further port- 2.23 2.20 2.72 1.95 9.10 share count helped, but margins continued folio optimization. In all, our 2023 EPS 2020 2.16 1.78 2.43 2.38 8.73 2021 2.77 2.59 2.45 231 10.12 to come under pressure from some of the forecast stands at $11.00. 2022 2.40 2 65 2.75 2.60 10.40 aforementioned factors The stock is down 15% in value since 2023 2.55 2.80 2.90 2.75 11.00 We have tempered our 2022 bottom- our January review and remains an line expectation. Management recently unfavorable selection for Timeliness. Cal- QUARTERLY DIVIDENDS PAID B Full provided guidance and this wasn't good. It But, it offers wide 3- to 5-year total return endar Mar.31 Jun.30 Sep.30 Dec.31 Year said that total revenues will grow 1% to prospects, especially on a risk-adjusted 2018 1.360 1.360 0 1.360 1.360 5.44 4% this year and that share earnings will basis. We think now is a good time for 2019 1.44 1.44 1.44 1.44 5.76 range between $10.15 and $10.65, the mid- long-term minded investors to stake a 2020 1.47 1.47 1.47 1.47 5.88 2021 1.48 1.48 1.48 1.48 5.92 point of which represents a 2.8% advance. claim here, with the company's strong 2022 149 We suspect that the operating environ- cash flow underpinning our optimism. ment will remain difficult, with inflation- Andre J. Costanza April 8, 2022 A) Diluted earnings. Excludes nonrecurring not sum due to rounding or changes in shares June, September, and December. = Dividend Company's Financial Strength Att osses/(gains): '10, (12c). Excludes discontin- outstanding. Next earnings report due late einvestment plan available. Stock's Price Stability 95 ued: '06, 47c; '07, 60c; '17, ($1.24); '18, April. C) In millions. Price Growth Persistence 50 $1.07); '19, ($1.29); '20, (37c). Earnings may | (B) Dividends historically paid mid-March, Earnings Predictability 95 2022 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber's own, non-commercial, internal use. No part TO subscribe call 1-800-VALUELINE_ What is the average annual expected growth rate in Sales between 2022 and 2026? D Question 2 1 pts Sales in 2023 are expected to be: O $67, 904 million O $ 37,803 million O $54,637 million O $72, 543 million_ What is the average annual expected growth rate in Net Income between 2022 and 2026? O 12.45% 0 8.37% o 5.16% O 16.03%