InvestorsObserver gives 3M Co (MMM) a strong valuation score of 66 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. MMM currently holds a better value than 66% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.
Metrics Analysis
MMM has a trailing twelve month Price to Earnings (PE) ratio of 18.3 which places it around the histroical average of roughly 15. MMM is currently trading at a average value due to investors paying around what the stock is worth in relation to its earnings. MMM's trailing-12-month earnings per share (EPS) of 8.82 does justify its share price in the market. Trailing PE ratios don't factor in the company's projected growth rate, resulting in select firms having high PE ratios due to high growth potential enticing investors even when the underlying company has produced low earnings to date.
MMM currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 2.04. The market is currently overvaluing MMM in relation to its projected growth due to the PEG ratio being above the fair market value of 1. MMM's PEG comes from its forward price to earnings ratio being divided by its growth rate. Due to the inclusion of more fundamentals of a company's overall health and a focus on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.
Summary
All together these valuation metrics paint a pretty poor picture for MMM at its current price due to a overvalued PEG ratio due to strong growth. The PE and PEG for MMM are worse than the average of the market resulting in a valuation score of 66.
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