3M Co., Caterpillar Inc. Slump After Earnings Reports

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As of this writing, shares of 3M were down 2.29% to $163.50 per share, while shares of Caterpillar plunged, falling as much as 5.77% to $81.07 per share

3M and Caterpillar released the earnings results from their most recently completed quarters before opening bell this morning. 3M reported earnings of $1.81 per share, an 11.7% year over year increase, on sales of $7.7 billion, a 2% year over year increase. Analysts had been expecting the company to post earnings of $1.80 per share on $7.77 billion in revenue.

Caterpillar posted adjusted earnings of $1.35 per share on sales of $14.24 billion, a 1% year over year decline. Analysts had been expecting the equipment manufacturer to report earnings of $1.55 per share on $14.18 billion in revenue.

Key metrics from 3M’s earnings report

3M reported $1.7 billion in operating income and an operating income margin of 21.5%. Net income was $1.2 billion, and the company said it converted 144% of its net income into free cash flow.

Industrial sales rose 1.4% to $2.6 billion, while Health Care sales rose 2.4% to $1.4 billion. Electronics and Energy revenue rose 3.3% to $1.4 billion, while sales from Safety and Graphics increased 3.4% to $1.4 billion. 3M’s Consumer segment saw a 2.2% increase in sales, which rose to $1.1 billion for the fourth fiscal quarter. Foreign currency exchange negatively impacted 3M’s earnings results by 4.4%.

For the full year, 3M reported earnings of $7.49 per share, an 11.5% year over year increase. Sales rose 3.1% to $31.8 billion, a new record. Management affirmed their full year estimates for this year as well. They expect earnings to be between $8 and $8.30 per share and sales to grow by 3% to 6%.

3M management also announced that they have increased the dividend for the current quarter by 20%.

Key metrics from Caterpillar’s earnings report

Caterpillar’s net earnings were $1.23 per share, compared to $1.54 per share last year. The company’s net earnings include costs related to restructuring.

Caterpillar reported record sales and profits in its Energy & Transportation segment and increases in both metrics in its Construction Industries segment. Falling prices for commodities, especially copper, iron ore and coal, dragged the company’s Resources Industries results lower in the quarter, resulting in Caterpillar missing its fourth quarter profit guidance.

Management expects sales for this year to be approximately $50 billion, which is significantly lower than the FactSet consensus estimate of $54.83 billion. They project profits of this year to be approximately $4.60 per share. Excluding restructuring costs, they’re expecting earnings of about $4.75 per share.

Earlier this month, Jim Chanos disclosed his bearish stance on Caterpillar, announcing that he was shorting the company’s stock.

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