3M, No Indicator of Conglomerate Business & Upside (MMM, GE, HON, UTX)

Industrials

Published: October 25, 2011 10:55 am

Last Updated: April 27, 2020 3:00 pm

3M Co. (NYSE: (NYSE: MMM) is standing apart from its competing conglomerate peers. Not for the better. United Technologies Corp. (NYSE: UTX), Honeywell International Inc. (NYSE: HON), and General Electric Co. (NYSE: GE) have all turned in more respectable earnings reports than what we saw from 3M. This may be the quarter that separates the men from the boys. We took a look at which companies in the world of U.S. conglomerates have the most upside to the Thomson Reuters consensus data and implied a news bias to each.

3M reported $1.55 EPS and $7.53 billion in sales, but we had estimates of $1.61 EPS and $7.77 billion in sales. Because of Europe and because of customers growing weary, organic volume growth being soft, and because of weak electronics sales, 3M guided 2011 to $5.85 to $5.95 EPS from a prior range of $6.10 to $6.25 EPS. 3M’s shares are down 4.2% at $78.88, its 52-week range is $68.63 to $98.19, and the consensus price target before this morning’s news was $103.29.

General Electric Co. (NYSE: GE) has listed lower since Friday’s earnings report. At $16.21 after a 1.5% drop today, the 52-week range is $14.02 to $21.65 and the consensus analyst price target is $20.79.

Honeywell International Inc. (NYSE: HON) went up on earnings and is up even today. The gain is only 0.1% at $51.82, but its 52-week range is $41.22 to $62.28 and the consensus price target is $58.67.

United Technologies Corp. (NYSE: UTX) has risen from last week and the 0.8% drop to $76.06 today compares to a 52-week range of $66.87 to $91.83 and to a consensus price target of $89.65.

3M would have an implied 28% expected gain to the consensus price target had its news not eliminated that today. We will soon see what the implied upside is, but the negative news flow is not going to do it well. Implied upside for peers is as follows: GE at over 28%, Honeywell over 13% and United Tech at almost 18%.

3M may prove to be a drag on conglomerates and on the market, but it looks as though General Electric still offers the most implied upside.

JON C. OGG

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