With shares of 3M Company (NYSE:MMM) trading at around $94.67, is MMM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

If you would like to save time, then simply look at the max chart for 3M. The answer to the question in the title will be right before your eyes. While past performance might not guarantee future success, it’s often a good indication. In the small stretches where 3M has unperformed, investors were still receiving dividend payments. Currently, 3M yields 2.50 percent.

3M has been, and will continue to be, aggressive with acquisitions. If the economy is weak, then 3M will look to acquire smaller companies at discount prices, which will set 3M up nicely for the future. As we all know, 3M hasn’t been as innovative from within as in the past, but that’s okay. It has still performed well, and most successful companies eventually end up being value plays opposed to growth plays. New CEO Inge Thulin is going to attempt to bring more innovation back to 3M, and he might have a decent chance of being successful since he’s an inside hire who likely has had some quality ideas up his sleeve for years. However, even if that’s not the case, 3M will be just fine.

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3M has a ton of exposure in Asia, especially in China. Therefore, watch China closely. Others don’t seem to be too concerned. For instance, Bank of America (NYSE:BAC) now has 3M on its Top 10 Favorite Stocks list. Whether you love or hate Bank of America, that’s quite an honor.

Now let’s take a look at some important numbers for 3M.

E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for 3M isn’t only strong, it’s much stronger than the debt-to-equity rations for its competitors, United Technologies (NYSE:UTX) and General Electric Company (NYSE:GE). The balance sheet for 3M isn’t perfect, but it’s much stronger than its competitors. Are we seeing a trend here?

 

Debt-To-Equity

Cash

Long-Term Debt

MMM

0.35

$5.02 Billion

$6.36 Billion

UTX

1.10

$6.24 Billion

$28.70 Billion

GE

2.77

$134.18 Billion

$355.11 Billion

 

T = Technicals on the Stock Chart Are Strong

3M has performed well over the past three years, but it has underperformed United Technologies and General Electric. So much for that trend.

 

1 Month

Year-To-Date

1 Year

3 Year

GE

4.87%

1.99%

16.48%

23.79%

UTX

5.64%

2.79%

15.87%

30.67%

GE

2.46%

0.91%

18.06%

50.91%

 

At $94.67, 3M is currently trading above all its averages.     

50-Day SMA

90.83

100-Day SMA

91.89

200-Day SMA

89.78

 

E = Earnings and Revenue Have Been Impressive

Earnings have been increasing every year since 2009. This is common. What is more impressive is that earnings have now exceeded 2007 levels. In regards to revenue, that feat was accomplished in 2010. For 2013, EPS is expected to grow between 9 and 11 percent.

 

2007

2008

2009

2010

2011

Revenue ($)in billions

24.46

25.27

23.12

26.66

29.61

Diluted EPS ($)

5.60

4.89

4.52

5.63

5.96

 

When we look at last quarter on a YoY basis, we see a decrease in revenue and an increase in earnings. The revenue miss shouldn’t be cause for concern.

 

9/2011

12/2011

3/2012

6/2012

9/2012

Revenue ($)in billions

2.76

3.04

2.58

2.59

2.55

Diluted EPS ($)

0.38

0.00

0.06

0.14

0.07

T = Trends Support the Industry

Considering 3M is a conglomerate with over 50,000 products being sold in many different industries, there will always be a trend somewhere.

Conclusion

There is a lot to like with 3M. This is a company with a Trailing P/E of 15.13, a Forward P/E of 13.82, over $5.30 billion in operating cash flow, double-digit margins, annual revenue and earnings growth, quality debt management, and strong global exposure.

3M is an OUTPERFORM.

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