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3M produces Post-it brand note paper.

Chona Kasinger/Bloomberg

The industrial conglomerate

3M

just delivered its biggest quarterly earnings outperformance in more than a decade, a sign that the global industrial economy is humming after the shock of the pandemic, but the stock is falling.

3M (ticker: MMM) earned $2.77 a share from $8.9 billion in sales, while Wall Street was looking for $2.30 in per-share earnings from $8.5 billion of sales.

It seems odd that the stock would drop despite a big outperformance relative to forecasts, but 3M exceeded Street estimates by only about 20%. That’s good, but investors see bigger beats and misses when going through quarterly earnings. 3M is a large, stable company, so it is less likely than others to outperform forecasts by huge margins. (

What is more, the company only reiterated its financial forecasts for 2021, saying it expects to earn between $9.20 and $9.70 a share. It raises questions among investors when a company’s quarterly profit is almost 50 cents higher than expected but management leaves its full-year guidance unchanged.

Wall Street is projecting about $9.63 in per share 2021 profits.

Still, the result represents a solid start to the year and shows investors that the economy is getting better. 3M products touch a host of industries including electronics, cars, and construction, among others.

“The first quarter was highlighted by broad-based organic growth, robust cash flow and a double-digit increase in earnings per share,” said CEO
Mike Roman
in the company’s news release.

Sales in the company’s safety and industrial business unit, the business that makes personal protective equipment such as masks, rose almost 14% year over year. Profits grew faster than sales.

Sales to the transportation and electronics industries rose more than 13%. Healthcare and consumer sales, which include the company’s Post-it Notes, grew about 7% and 10% year over year, respectively.

3M scheduled a conference call for 9 a.m. Eastern time to discuss results. Analysts and investors were expected to ask about the outlook for 2021.

Coming into Tuesday, 3M stock was up about 14% year to date, a little better than comparable gains of the overall market. The shares were down about 1% in premarket trading, while futures on the

S&P 500

and

Dow Jones Industrial Average

were both down about 0.1%.

Write to Al Root at allen.root@dowjones.com

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