3M Stock: Buy, Sell, or Hold?
What to do with 3M (NYSE: MMM) stock? The bulls will argue that the company's valuation and 6.3% dividend yield make it a compelling buy for a company in turnaround mode. Meanwhile, the bears will point to the company's lackluster growth history, disappointing 2024 guidance, and failure to generate meaningful margin expansion over the years. Here's what you need to know before buying the stock.
In a previous article, I discussed the company's outlook for 2024 while outlining management's poor track record of meeting sales guidance. This isn't just an issue of management overpromising and underdelivering (although that's bad enough). It's also a question of whether the business is being run well.
It stands to reason that management structures its business and costs with its guidance in mind, and when it fails to meet expectations, there's likely to be margin pressure due to the extra cost in its structure. As such, it's no surprise that 3M has struggled with margins over the years. The following chart shows its gross margin performance, alongside that of multi-industry industrial Illinois Tool Works (NYSE: ITW) -- more on that in a moment.
Source Fool.com
