Industrial conglomerate and Dow-30 component 3M Company (MMM Free 3M Stock Report) recently reported fourth-quarter results. Sales rose 2%, to $7.6 billion, which was just $0.1 billion below both our target and the consensus estimate. Organic sales were up 3% and acquisitions added another 1% before unfavorable currency translation of 2%. All five of the company's segments reported favorable local-currency revenue growth, and 3M posted positive comparisons in every geography it serves. EBITDA margins widened handsomely in the period, too, which led to 15% share-earnings growth. The reported total of $1.62 was in line with most estimates. Finally, management noted that the company paid out slightly more than $0.4 billion in dividends and bought back $1.7 billion worth of stock in the December quarter. 

The Industrial group notched sales growth of 6%. The organic advance was 6%; the acquisition of Ceradyne added 2%; and foreign exchange impacts were 2%. Growth was driven by advanced materials, automotive OEM, and aerospace among others and sales rose in all major geographies. Operating income growth of 14% far exceeded expectations.

The Health Care division reported overall top-line growth of 2%, owing to strong performances turned in by information systems, food safety, critical and chronic care, etc. The gain in local-currency was 4%, and unfavorable currency translation was 1%. Again, revenues rose in all major geographies. However, Health Care's EBITDA slipped 1%, which was unanticipated.

Safety & Graphics put together a solid quarter, too. Higher sales around the world led to 3% growth in U.S. dollars, as local-currency gains of 5% were offset by foreign exchange headwinds of 2%. Management said that roofing granules, personal safety, commercial graphics, and architectural all helped drive the top-line gain. Profits here were also up handsomely, as EBITDA increased 16%.

The struggling Electronics & Energy segment made some progress in the period, as slightly positive local currency sales growth was mitigated by unfavorable currency translation of 1%. The energy-related units grew for the most part, while the electronics-related businesses continued to struggle. The group was also unable to report positive top-line comparisons in Latin America and Canada. Still, despite the slip in sales, operating income advanced 1%, which was in line with our expectations. 

Finally, the Consumer group also stumbled a bit in the fourth quarter, as revenues dipped 1%. Here organic sales growth of 1% was offset by negative foreign exchange translation of 2%. The consumer health care and home care arms led the charge, but this segment was also unable to report growth in Latin America and Canada. In addition, EBITDA fell 3%.

Investors should be mostly pleased with 3M's performance in 2013, which was highlighted by 3% top-line growth and a 6% share-earnings advance. The conglomerate also returned a record amount ($5.2 billion via stock repurchases and $1.7 billion via dividends) to shareholders. The company also reaffirmed its 2014 expectations, which call for a local-currency sales advance of 3%-6% and a share-earnings gain of 9%-12%. Our growth estimates are comfortably within these bands, at 5% and 11%, respectively.

Wall Street's reaction to the press release was not entirely unexpected, as MMM shares dipped 2% in early trading. Like many of its Dow-30 counterparts, MMM stock has been struggling to maintain the ground gained throughout 2013. The past two weeks or so have been especially difficult, as the issue has fallen considerably from a high of $138. Still, despite the recent pullback in price, we think MMM shares are priced right, as longer-term capital gains potential is uninspiring. The dividend yield remains very healthy, though, especially in this low-rate environment.

About the Company:3M Company, a component of the Dow Jones Industrial Average, is a diversified manufacturer that sells more than 50,000 products in 65 countries. Its six business segments include: Industrial & Transportation (34.6% of 2012 revenues); Healthcare (17.3%); Display & Graphics (11.9%); Consumer & Office (14.4%); Safety, Security & Protection (12.7%); and Electro & Communications (10.8%).

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.