$3M (MMM.US)$It is an American company listed in 1946. From ...

逍遥投资派 commented on a stock · Sep 8, 2022 23:15

$3M (MMM.US)$It is an American company listed in 1946. From 2002 to the present, the stock price has increased from $117 to $119.3, with an average ROI of 3.6% taking into consideration a 1 for 2 stock split during this period. The main business is safety and industrial products, transportation and electronic products, as well as healthcare. The primary markets are in the USA, Europe, and the Asia-Pacific, with thorough globalization.

Over the past 5 years, the gross margin has slowly decreased from 49.5% to 46.9%, with relatively minor changes. The return on equity has fluctuated above 42%, which is very attractive.

Over the past 5 years, the revenue has been around 32 billion, growing rapidly to 35.4 billion in 2021. Operating profit decreased from 7.2 billion to 6.1 billion, then rebounded to 7.7 billion. The net income fluctuated around 5 billion and reached 5.9 billion in 2021.

In the first two quarters of 2022, the revenue decreased by 1.5%, and operating profit decreased by 60%. This was mainly due to an 81% surge in sales and administrative expenses in the second quarter, leading to a 56% decrease in net income. The second quarter was only able to avoid losses due to non-operating income.

The income statement shows that in 2021, interest expenses accounted for 6% of operating profit, which is not a heavy burden.

Over the past 5 years, the asset-liability ratio rose to 77% after initially increasing to 69%, then fell back to 70%.

Inventory has been increasing rapidly recently, with an increase of 0.75 billion in 2021 and a further increase of 0.66 billion in the first two quarters of 2022. However, compared to the overall scale and revenue, it is still reasonable.

Goodwill of 13.064 billion, accounting for 95% of net assets, a relatively high proportion.

Long-term borrowings of 14.019 billion, accounting for 101% of net assets, the leverage ratio is not low.

The accumulated treasury stock has reached 30.781 billion, which is more than twice the net assets and has not been cancelled.

For the past 5 years, operating net amount, except for 2019, has been significantly higher than the investment net amount, resulting in significant shareholder surplus.

Currently, the PE ratio is 11.8, and the TTM PE ratio is 16.6. Due to the high leverage ratio, despite the high gross margin and return on net assets, it may not be very attractive in the short term in the context of interest rate hikes, and close observation may be necessary.

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