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Strength Seen in 3M (MMM): Can Its 8.8% Jump Turn into More Strength?

3M (MMM) shares soared 8.8% in the last trading session to close at $102.53. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 7.4% loss over the past four weeks.

3M’s shares jumped following its tentative agreement of at least $10 billion with several U.S. cities to settle claims associated with the usage of per- and polyfluoroalkyl substance (PFAS), a harmful chemical, which can cause cancer and other serious ailments.

Cities like, Stuart, FL have claimed that 3M manufactured firefighting foams containing PFAS, despite knowing how harmful the chemical was. The city has been seeking more than $100 million from 3M for water filtration and soil remediation.

Alike the Start lawsuit, 3M has been facing thousands of other lawsuits from different cities, which could result in billions of dollars in damages for the company.

Amid regulatory pressure to restrict the use of PFAS, last December, 3M announced that it will cease manufacturing PFAS and discontinue its use in products by the end of 2025.

This maker of Post-it notes, industrial coatings and ceramics is expected to post quarterly earnings of $1.74 per share in its upcoming report, which represents a year-over-year change of -29.8%. Revenues are expected to be $7.81 billion, down 10.2% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.


For 3M, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on MMM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

3M is a member of the Zacks Diversified Operations industry. One other stock in the same industry, Carlisle (CSL), finished the last trading session 4.4% higher at $225.93. CSL has returned 3.2% over the past month.

For Carlisle , the consensus EPS estimate for the upcoming report has changed -9.8% over the past month to $4.97. This represents a change of -19.2% from what the company reported a year ago. Carlisle currently has a Zacks Rank of #4 (Sell).

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