It's no secret that 3M Co. is one of the best run companies in North America, and it's also no
secret that the company's stock valuation of 20 times current earnings
is hardly cheap. The company is best understood as a play on global
industrial growth, and in this sense it's useful to compare it to other
industrial stalwarts, such as Illinois Tool Works and Emerson Electric. With this in mind, investors need to ask themselves what 3M needs to do to make it a good value.
3M's relative valueThe graph
below offers a look at its valuation compared to Emerson Electric and
Illinois Tool Works using enterprise value (market cap plus debt), or
EV, over free cash flow:
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