3M Projects Growth: What’s Ahead for Investors in 2025?
3M (NYSE: MMM) stock gained about 17% in 2024, marking a turnaround after several years of underperformance. As we look towards 2025, the question remains: how can investors best track 3M’s progress?
CEO Bill Brown is clear: 3M is not a quick-fix scenario. However, his restructuring efforts highlight important operational metrics for investors to follow that could bolster the company’s performance over time.
Where to invest $1,000 now? Our analyst team has identified the 10 best stocks to buy today. See the 10 stocks »
Looking Ahead: 3M in 2025
3M has an investor day scheduled for February 26, where CEO Bill Brown will share detailed plans and guidance. He has already been open about the changes required at 3M, prioritizing two main goals:
- Boost organic revenue growth through “innovation reinvigoration and commercial excellence.”
- Enhance operational excellence.
Organic Revenue Growth: Focus on New Product Introductions
Achieving these goals will take time, especially when it comes to increasing new product introductions (NPI). 3M recognizes that it lost ground in the past decade in this area. While NPI improvements may be gradual, 3M is taking incremental steps now.
For instance, Brown has reassigned 100 employees in research and development to focus on NPI initiatives. The company is speeding up the rollout of “low-risk product line extensions,” reducing the time to introduce new stockkeeping units (SKUs) from 100 to just 60 days in 2024. As a result, NPIs are expected to boost by 10% in 2024, with further acceleration projected for 2025.
Historically, 3M has been recognized for its commitment to R&D, leading to products that not only grow market share but also have strong pricing power. As sales rise, profit margins typically expand, benefiting from the company’s scale. Therefore, NPI growth is not just an opportunity for increased revenue, but also for enhanced margins.
Image source: Getty Images.
Driving Operational Excellence: Improving Gross Profit Margins
Brown’s strategy for 3M aims to boost productivity by streamlining supply chain processes, enhancing supply quality, and reducing costs. His target is a 2% increase in productivity, translating to approximately $260 million from the company’s annual $13 billion cost of goods sold (COGS).
Additionally, improving operating efficiency will contribute to better operating profit margins. Brown acknowledged a significant concern: previous management often missed their guidance, making it hard for investors to rely on forecasts. This disconnect impacted operational efficiency, with equipment utilization rates dropping to just 50%.
Without efficient equipment usage, timely product delivery suffers and inventory costs rise. Recently, Brown announced a major project to redesign the forecasting process. This initiative, currently in its early stages, will focus on refining demand plans for two major divisions using advanced analytical tools.
Image source: Getty Images.
Results from this forecasting project are anticipated to be released before the investor day in February, and management will likely address it in the upcoming fourth-quarter earnings report. Enhancing operating efficiency will help lower costs, improve cash flow, and strengthen relationships with suppliers and distributors.
Is 3M a Stock to Buy in 2025?
3M presents a significant self-help opportunity for 2025. While the benefits of NPI investment may take time to fully materialize, short-term improvements are on the horizon. Likewise, the journey to enhance supply chain productivity and operating efficiency will require patience. Still, if Brown can show progress, 3M could emerge as a valuable investment, even amidst low single-digit organic sales growth.
Overall, 3M is a stock worthy of consideration for value investors in 2025 due to its self-help narrative and a management team that seems committed to generating shareholder value.
Should You Invest $1,000 in 3M Right Now?
Before making a decision to invest in 3M, keep in mind:
The Motley Fool Stock Advisor analyst team recently identified their picks for the 10 best stocks to buy currently, and 3M did not make the list. The selected stocks could lead to substantial returns in the years to come.
Consider the example of Nvidia — when it made the list on April 15, 2005. If you invested $1,000 at that time, it would now be worth $839,670!*
Stock Advisor helps investors with an actionable plan for success, providing updates from analysts and two new stock picks each month. Since 2002, the service has more than quadrupled the S&P 500’s returns.*
See the 10 stocks »
*Returns as of December 30, 2024
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends 3M. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
