The Rising Influence of Rising Affluence

[DewDiligence]

3M posts solid quarter, but analysts want more:

http://online.wsj.com/news/articles/SB10001424052702304799404579155230763116944

The sprawling St. Paul, Minn.-based conglomerate, whose products include Scotch tape and Post-it notes, modestly exceeded Wall Street expectations Thursday by reporting a 5.9% rise in profit for the third quarter. 3M's organic sales growth, which excludes currency fluctuations and recent acquisitions, accelerated to 5.8% in the latest quarter from a sluggish 2% in this year's first half, partly because of stronger sales of films, adhesives and other materials used to make smartphones and tablet computers.

But 3M's latest forecast for full-year earnings per share suggests they will rise about 6%, well short of the company's long-term goal of 9% to 11% growth. In a conference call, analysts including Scott Davis of Barclays Capital and Andew Obin of Bank of America Merrill Lynch pressed 3M executives about prospects for reaching double-digit earnings growth.

…3M is an unusually reliable performer: Dividends have increased annually in each of the past 55 years, and operating profit margins are consistently above 20%. But analysts have long argued that the company needs to grow faster if it is to excite investors.

I’ll settle for steady, boring growth, LOL. One other thing: 3M is not a true conglomerate, as the opening paragraph above claims; rather, 3M is a materials science company with highly diverse product lines (an important distinction).