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US Equities · Finance research note

MMM — 3M

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 23.32%
Profit Margins 11.14%
Return on Equity 71.46%
Return on Assets 8.12%
Free Float 0.52B
Dividend Yield 1.90%
Short Int % Utilisation 1.84%

2.2 Growth

Metric Value
Revenue Growth 1.3%
Free Cash Flow 2.32B
EBITDA 14.29 (Ratio)
Enterprise Value 89.16B
EV/Revenue 3.56
EV/EBITDA 14.29

Revenue growth of 1.3% suggests mature or challenged top-line momentum.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 26.60%
Risk / Std Dev (Ann.)* 26.45%
1-Year Price Return* 22.10%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $182.65
52-Week Range $139.34 – $184.90
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $24.95B $24.57B
Net income Reported net income $3.25B $4.17B
Total assets Year-end reported balance $37.73B $39.87B
Shareholders’ equity Year-end reported balance $4.70B $3.84B
Net margin Net income ÷ revenue 13.03% 16.98%
Asset turnover Revenue ÷ total assets 0.6612x 0.6164x
Equity multiplier Total assets ÷ shareholders’ equity 8.0249x 10.3769x
ROE Net margin × asset turnover × equity multiplier 69.12% 108.62%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $24.95B
Prior annual revenue $24.57B
EBIT $5.16B
Tax rate 23.81%
NOPAT = EBIT × (1 − tax rate) $3.93B
Forecast start-growth basis 1.52%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $3.93B
Add: depreciation & amortisation $1.31B
Less: capital expenditure -$910.00M
Less/(add): working-capital cash-flow movement -$3.20B
Current unlevered FCFF $1.13B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 1.52% $3.99B $1.33B -$923.81M -$3.24B $1.15B $1.10B
2 1.76% $4.06B $1.35B -$1.04B -$3.30B $1.07B $924.60M
3 2.01% $4.14B $1.38B -$1.17B -$3.37B $984.05M $774.50M
4 2.25% $4.24B $1.41B -$1.30B -$3.44B $899.01M $642.94M
5 2.50% $4.34B $1.44B -$1.44B -$3.53B $811.59M $527.41M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.08
Cost of equity 10.65%
Pre-tax cost of debt 7.38%
WACC 10.05%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $11.02B
Implied terminal EV / EBITDA 1.54x
Terminal value as % of enterprise value 63.24%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $3.97B
Present value of terminal value $6.82B
Indicated enterprise value $10.79B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $10.79B
Less: gross interest-bearing debt $12.60B
Add: cash and equivalents $5.93B
Add: affiliate investments $0.00
Less: minority interests $45.00M
Indicated common equity value $4.08B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 541,300,000.00
Share-count basis reported diluted weighted-average shares
Current market price $180.46
DCF indicative value per share $7.53
Indicative value vs. market price -95.83%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:42:02.254663 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha -16.58% -0.22%
Adjusted R² 0.22 0.36
Annualised residual volatility 22.96% 20.70%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 0.84 (6.19) 1.25 (8.92)
Size (SMB) 0.37 (2.04) 0.18 (1.00)
Value (HML) 0.53 (3.39) -0.14 (-0.78)
Profitability (RMW) NM 0.44 (2.96)
Investment (CMA) NM 1.42 (5.51)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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