3M Company (NYSE:MMM) shareholders should be happy to see the share price up 10% in the last quarter.    But that cannot eclipse the less-than-impressive returns over the last three years.  Truth be told the share price declined 49% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.    

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.  

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine.  By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the three years that the share price declined, 3M's earnings per share (EPS) dropped significantly, falling to a loss.   Extraordinary items contributed to this situation.   Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change.  But it's safe to say we'd generally expect the share price to be lower as a result!

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NYSE:MMM Earnings Per Share Growth July 1st 2024

This free interactive report on 3M's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.  

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR).  The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested.  It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend.  As it happens, 3M's TSR for the last 3 years was -30%, which exceeds the share price return mentioned earlier.  The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that 3M shareholders have received a total shareholder return of 28% over the last year.   That's including the dividend.     Notably the five-year annualised TSR loss of 2% per year compares very unfavourably with the recent share price performance.  The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future.        I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too.   Case in point: We've spotted   2 warning signs for 3M  you should be aware of.