4 ms·

Is 3m still a solid company? I’ve been wanting to invest for ten years but the pe has always been too high.

ryansmccoy 8y ago
I would def look into the track record of the new CEO, who started in JUL'18. Stock has under performed since his appointment.
- mensetmanusman 8y ago
  The prior CEO took on cheap debt though. This helped purchase massive stock buybacks (great for executives) which helped raise stock prices to satiate animal spirits. For some reason US business leaders (mostly under pressure from wall st.) aren’t the best at long term thinking anymore.
  - ryansmccoy 8y ago
    Great for executives and shareholders, many of which probably work at 3M. What else was management suppose to do with the cash they are generating? And, why was the debt cheap in the first place?
    - Guest42 8y ago
      That decision benefits few at the cost of many (and eventually the few, just later). It is easy to imagine better uses of cash than full dedication to a buyback. Personally, I would make sure that R&D has plenty of funding, buy bonds, modernize old equipment, if necessary get consultants for leasing and insurance expenses,....basically hedge against risks and invest in competitiveness. Buybacks are fine to an extent. I think you know why the debt was cheap.
      - rlucas 8y ago
        1. Corporations exist to benefit their shareholders over some term (short, long, whatever) as the shareholders ask for, through their elected board of directors. I tend to be sympathetic to what you're saying about taking the long view (esp. for a company like 3M) but the many vs. few doesn't make sense in a corporate context. It's the now vs. the later. 2. "Buy bonds"?? A corporate CFO would be pilloried for buying bonds. The shareholders are emphatically not interested in the CFO playing amateur bond-picker in order to generate a bunch of double-taxable income.
mml 8y ago
IMHO, they are a formerly great company that has decayed to... something less. //dad worked there for 25yrs
theNJR 8y ago
Look into Avery Dennison. Some great innovation coming out of that company and have been on a nice climb the past few years.
runako 8y ago
I believe the cash-on-cash return over the last 10 years is something like 13% annually.
baseten 8y ago
I think they've been steadily hollowing themselves out just like the every other American / global company that makes stuff. They don't spend on R&D like they used to, instead they've tried to acquire new products and technology. It feels like the culture of innovation they built is lagging, and like for many American companies losing their way, I wish they could make a case for a real reinvestment in research with a 10 year payback instead of a next quarter result. This is anecdotal and I've only worked with one division of 3M in the past, but i've seen changes in how they support companies downstream. It may just be how everything is changing everywhere. They still make good products, and they're consistently very good but always premium priced.
- dsfyu404ed 8y ago
  Why do research when you can spend the same amount of money just buying small companies that have researched and innovated? I'm honestly asking. It doesn't seem like there's any substantial pros to doing the research in-house for a big company like 3m. A top down directive to make use of $new_acquisition's tech every now and then seems easier than fostering a culture of innovation at all times.
  - _nedR 8y ago
    I am no expert, but one reason could be that there are certain avenues of research could only be viable for a company with large resources and funding not to mention patience (An example is pharma companies that spends billions and a decade developing a new drug).
    - pgwhalen 8y ago
      It’s funny that you say that about pharmas - I’m not terribly informed but I’ve sure read a lot recently about big pharma following that model quite a lot actually.
  - petra 8y ago
    Some types of research do fit startups. But what about the more expensive, longer term research ? Isn't there value in that ?
protomyth 8y ago
They polluted the heck out of a lot of land in MN and NJ, but it looked liked they got away with it until recently. One example http://www.startribune.com/lake-elmo-to-use-3m-settlement-money-for-new-well/507837822/ http://www.startribune.com/lake-elmo-to-use-3m-settlement-mo...

I would def look into the track record of the new CEO, who started in JUL'18. Stock has under performed since his appointment.

mensetmanusman 8y ago
The prior CEO took on cheap debt though. This helped purchase massive stock buybacks (great for executives) which helped raise stock prices to satiate animal spirits. For some reason US business leaders (mostly under pressure from wall st.) aren’t the best at long term thinking anymore.
- ryansmccoy 8y ago
  Great for executives and shareholders, many of which probably work at 3M. What else was management suppose to do with the cash they are generating? And, why was the debt cheap in the first place?
  - Guest42 8y ago
    That decision benefits few at the cost of many (and eventually the few, just later). It is easy to imagine better uses of cash than full dedication to a buyback. Personally, I would make sure that R&D has plenty of funding, buy bonds, modernize old equipment, if necessary get consultants for leasing and insurance expenses,....basically hedge against risks and invest in competitiveness. Buybacks are fine to an extent. I think you know why the debt was cheap.
    - rlucas 8y ago
      1. Corporations exist to benefit their shareholders over some term (short, long, whatever) as the shareholders ask for, through their elected board of directors. I tend to be sympathetic to what you're saying about taking the long view (esp. for a company like 3M) but the many vs. few doesn't make sense in a corporate context. It's the now vs. the later. 2. "Buy bonds"?? A corporate CFO would be pilloried for buying bonds. The shareholders are emphatically not interested in the CFO playing amateur bond-picker in order to generate a bunch of double-taxable income.

mml 8y ago

IMHO, they are a formerly great company that has decayed to... something less. //dad worked there for 25yrs

theNJR 8y ago

Look into Avery Dennison. Some great innovation coming out of that company and have been on a nice climb the past few years.

runako 8y ago

I believe the cash-on-cash return over the last 10 years is something like 13% annually.

baseten 8y ago

I think they've been steadily hollowing themselves out just like the every other American / global company that makes stuff. They don't spend on R&D like they used to, instead they've tried to acquire new products and technology. It feels like the culture of innovation they built is lagging, and like for many American companies losing their way, I wish they could make a case for a real reinvestment in research with a 10 year payback instead of a next quarter result. This is anecdotal and I've only worked with one division of 3M in the past, but i've seen changes in how they support companies downstream. It may just be how everything is changing everywhere. They still make good products, and they're consistently very good but always premium priced.

dsfyu404ed 8y ago
Why do research when you can spend the same amount of money just buying small companies that have researched and innovated? I'm honestly asking. It doesn't seem like there's any substantial pros to doing the research in-house for a big company like 3m. A top down directive to make use of $new_acquisition's tech every now and then seems easier than fostering a culture of innovation at all times.
- _nedR 8y ago
  I am no expert, but one reason could be that there are certain avenues of research could only be viable for a company with large resources and funding not to mention patience (An example is pharma companies that spends billions and a decade developing a new drug).
  - pgwhalen 8y ago
    It’s funny that you say that about pharmas - I’m not terribly informed but I’ve sure read a lot recently about big pharma following that model quite a lot actually.
- petra 8y ago
  Some types of research do fit startups. But what about the more expensive, longer term research ? Isn't there value in that ?

protomyth 8y ago

They polluted the heck out of a lot of land in MN and NJ, but it looked liked they got away with it until recently. One example http://www.startribune.com/lake-elmo-to-use-3m-settlement-money-for-new-well/507837822/ http://www.startribune.com/lake-elmo-to-use-3m-settlement-mo...