If you are staring at your portfolio and wondering what to do with 3M, you are not alone. The stock certainly has had its moments lately, and investors are rightly questioning whether there is more upside ahead or if it is time to lock in those gains. After a strong run earlier this year, 3M’s return year-to-date is still up 14.7%, capping off a 12.6% gain over the past 12 months. However, the last week and month have seen declines of 6.2% and 3.1% respectively, as markets digest shifting macroeconomic sentiment and recent legal developments tied to the broader industrial sector. Zooming out, the long view remains impressive: shares have surged 76.3% over three years and posted 25.7% growth in five years, underlining why 3M remains a fixture in so many portfolios.
Of course, dazzling long-term charts aren’t the full story. With every rally comes the question: Is this growth justified by the fundamentals, or is the stock getting ahead of itself? Here’s where the numbers get interesting. According to our valuation checks, 3M scores a 4 out of 6, making it undervalued in most but not all of our most common measures.
In this article, we will break down each valuation approach and see how 3M stacks up against its peers and historical averages. And, be sure to stick around as we explore not just the usual formulas, but a smarter way to think about valuation that investors often overlook.
A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to today’s value. This method helps investors determine what a company’s shares are truly worth, based on the money it is expected to generate in the years ahead.
For 3M, the latest numbers show the company recorded a last twelve months Free Cash Flow (FCF) of negative $2.3 Billion, largely a reflection of one-off impacts in recent periods. Looking forward, analysts expect significant recovery and growth, with FCF projected to rise to $4.7 Billion by 2029. While analyst estimates directly extend for about five years, subsequent years are calculated by Simply Wall St using conservative growth assumptions. FCF is forecasted to gradually increase to about $6.2 Billion by 2035.
Bringing these future billions of dollars in cash flow back to present value terms, the DCF analysis estimates the intrinsic fair value of 3M shares at $188.13. This stands about 20.9% above the current market price, indicating the stock is undervalued according to this method.
Story Continues
Result: UNDERVALUED
MMM Discounted Cash Flow as at Oct 2025
Our Discounted Cash Flow (DCF) analysis suggests 3M is undervalued by 20.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
For established, profitable companies like 3M, the Price-to-Earnings (PE) ratio is a go-to valuation tool. This metric compares the current share price to per-share earnings, making it especially useful when a company generates stable profits, as it gives a clear sense of how much investors are willing to pay for each dollar of earnings.
It is important to remember that what constitutes a “normal” or “fair” PE ratio depends on expectations for future growth and how risky the company’s profits are. For example, companies with stronger growth prospects or more predictable earnings often command higher PE ratios than slower-growing or riskier peers.
Currently, 3M trades at a PE ratio of 20.1x, which is well above the Industrials industry average of 12.8x but below the average of close peers at 25.2x. However, instead of just comparing to other companies, let’s consider the Simply Wall St Fair Ratio, which is a proprietary benchmark that calibrates the expected multiple by factoring in 3M’s earnings growth, risk, profit margins, market cap, and its industry profile. This approach is more robust because it customizes expectations to the company’s unique situation, rather than relying just on broad benchmarks.
According to this Fair Ratio, 3M’s shares “should” trade at about 27.9x earnings. With the current PE at 20.1x, the shares are trading at a significant discount to where the Fair Ratio suggests they “deserve” to be. This means, based on growth-adjusted expectations, 3M actually appears undervalued on earnings.
Result: UNDERVALUED
NYSE:MMM PE Ratio as at Oct 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is more than just a number; it is your view or story about a company’s future, where you bring together your own assumptions for fair value, as well as forecasts for revenue, earnings, and margins. Narratives work by linking the company’s story to a full financial projection and ultimately to what you believe is its fair value today.
Narratives are designed to be easy and accessible for every investor, and are available on Simply Wall St’s Community, where millions share and compare their perspectives. By building a Narrative, you can clearly see how your expectations for 3M’s business performance and risks translate into a buy, hold, or sell view, simply by comparing your estimated fair value to the actual price. Narratives are always up to date, automatically refreshing as soon as there is major news or fresh results. This ensures your investment thesis is always current.
For example, some investors see 3M’s focus on innovation and efficiency as a springboard for profit growth and value 3M as high as $187.0 per share, while others see lingering litigation and industry challenges and estimate a much lower fair value, such as $101.0. Narratives let you test both perspectives, or create your own, with complete transparency.
Do you think there’s more to the story for 3M? Create your own Narrative to let the Community know!
NYSE:MMM Community Fair Values as at Oct 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include MMM.
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