-
3M is generating impressive operational improvements under CEO Bill Brown.
-
Last year was essentially a self-help story for the company as its end markets weren’t robust.
-
A combination of management improvements, valuation, and the possibility of end-market improvement — notably in interest-rate-sensitive areas — leaves the stock looking undervalued.
The market wasn’t impressed by 3M‘s (NYSE: MMM) recent fourth-quarter earnings report and its 2026 guidance. But here’s the thing. The disappointing news came from its macro-economic outlook, rather than from its internal execution. On the contrary, CEO Bill Brown’s operational restructuring is improving profit margins, productivity, and innovation, and the company is primed to perform very well as its end markets improve.
Here’s why 3M stock is a great buy now.
Investors were underwhelmed by management’s guidance for just 3% organic sales growth in 2026, and it’s worth noting that 2025 full-year organic sales growth of just 2.1% came in at the low end of the 2%-3% guidance management gave at the start of the year.
Whichever way you look at it, 3M’s end markets aren’t helping much. Still, management’s guidance for 2026 earnings per share (EPS) of $8.50 to $8.70 implies earnings growth of 5.5% to 7.9%. It’s a rate significantly higher than management’s estimate of 1.5% growth for the global industrial production index in 2026. Also note that 3M’s estimate for 2025 was 2%, so in its view, global industrial growth is slowing in 2026, but its estimated organic sales growth rate is set to improve to 3% in 2026 from 2.1% in 2025.
The relative improvement comes down to Brown’s operational restructuring, which has improved on-time in-full delivery rates and asset utilization, reduced losses due to quality issues, and focused on new product introductions (NPI). That last thing is particularly important with 169 NPIs in 2024, growing by 68% to 284 in 2025, and forecast to grow by 23% in 2026 to 350.
There are three reasons to buy 3M stock. The first comes down to the NPIs. The main part of 3M’s earnings growth in 2026 is set to come from what management defines as “price/volume” and “net productivity.” NPIs are critical to driving earnings growth as they tend to command more pricing power and can be differentiated products that break out of the commodity pricing mold. That’s something 3M struggled with under then-CEO Mike Roman.
