Earnings Preview: Raw material costs likely to weigh on 3M Q3 results

3M Company (MMM) is scheduled to report earnings results for the third quarter of 2018 on Tuesday, October 23. Analysts expect the company to report earnings of $2.70 per share on revenues of $8.4 billion. This would reflect a growth of 3% in revenue and 15.9% in earnings on a year-over-year basis.

The company has never missed market expectations in the past four quarters. Results have either matched or topped estimates and can be expected to do the same for the to-be reported quarter.

For the third quarter, 3M is expected to see year-over-year revenue growth across all its segments. Other factors that could benefit the company include strong products, strategic portfolio reviews and innovation as well as stable end-market demand.

The factors that could hurt 3M include tough competition, negative impacts from foreign currency and higher expenses. The company can expect continued pressure from increases in raw material costs for the third quarter and the foreseeable future.

In the second quarter, 3M delivered better-than-expected results, with a 7% increase in revenue and a 19% improvement in EPS. The revenue growth was driven by a 15.8% sales increase in the safety and graphics business. The company also recorded a benefit of $0.48 per share from the divestiture of its communication markets business in the quarter.

3M reports 7.4% rise in revenue

Last quarter, 3M updated its full-year 2018 earnings guidance to reflect the impact from the divestiture. GAAP EPS is expected to be $9.08 to $9.38 while adjusted EPS is expected to be $10.20 to $10.45.

3M’s shares have dropped more than 14% year to date. Looking at the past one month, the stock is down 5%.

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