3M (MMM) beats Q1 estimates, forecasts 40% dividend payout ratio; shares rise

3M Co. (NYSE: MMM) shares rose more than 3% in early trading on Tuesday after the company topped analyst expectations for the fiscal Q1 2024 and provided an update for its dividend payout.

The conglomerate posted first-quarter earnings per share (EPS) of $2.39, surpassing analyst expectations of $2.10. Revenue stood at $7.72 billion, also above the consensus projection of $7.63 billion.

The operating margin improved significantly to 18.8% compared to 15.4% in the same period last year.

Looking ahead, 3M forecasts full-year 2024 EPS to range between $6.80 and $7.30, compared to a consensus estimate of $7.00. The company anticipates adjusted organic sales growth to be between unchanged and 2%.

Further, 3M said it expects its dividend payout ratio to be approximately 40% of adjusted free cash flow. The declaration of the second-quarter dividend is anticipated in May 2024, pending board approval.

“We delivered results that were better than our expectations as we returned to organic growth and achieved double-digit adjusted earnings growth,” CEO Mike Roman said in a statement.

He added, “We improved performance in our businesses through strong operational execution, completed the spin-off of Solventum, and finalized two major legal settlements.”

Reacting to the report, Citi analysts said the Neutral-rated company's results reflected good execution despite muted end markets.

"Some puts and takes, but overall, we think 1Q results were solid and reflect good progress by MMM toward its productivity actions/restructuring, which we think is reflected in strong margin performance in 1Q," wrote the investment bank, which maintained a $98 price target for the stock.

By Vahid Karaahmetovic

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