Is 3M Company (MMM) overvalued?
On Equity Rank's model estimate, MMM trades close to its fair value (3% above it). 3M Company (MMM) last closed at $185.15; the multi-method model fair value is $180.08.
| Price | Model fair value | Price vs model |
|---|---|---|
| $185.15 | $180.08 | 3% above |
What the answer rests on
- 2 of 10 valuation methods put MMM's value above its price and 8 put it below, so the methods mostly agree.
- To justify today's price, MMM's free cash flow would need to grow about 23.9% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -28.6% a year.
- MMM trades at 28.9 times its last year's earnings, against a median of 24.8 for 187 profitable Industrials companies.
- Over the past year the price sat below the model fair value on 5% of trading days. The gap ranged from 3% below to 49% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind MMM's fair value · What prices assume · Other companies