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With improving financial results come higher expectations, and such was the case for 3M (MMM), which exceeded EPS and revenue expectations again in 3Q24 as another quarter of positive organic sales growth and stronger operating margins drove the upside performance. Unlike most of MMM's earnings reports in recent history, the run up to the results this time was decisively bullish with shares up by 30% since it last reported earnings on July 25, explaining why the stock is struggling to gain much traction today.

Furthermore, it's worth noting that the magnitude of MMM's earnings beat was more modest in Q3 relative to the past several quarters, providing investors with an excuse to lock in some gains. From a fundamental perspective, though, recently appointed CEO William Brown still has the company trending in the right direction.

• For the third consecutive quarter, MMM delivered positive organic sales growth, which came in at +1.0% on an adjusted basis. That may seem like an unimpressive feat, but it marks a significant improvement compared to 2021 and 2022, when MMM was consistently posting negative organic sales growth.
• Like last quarter, the Transportation & Electronics segment was the standout, generating organic growth of 3.9%. The ongoing rebound in demand for consumer electronics (organic sales up low-double-digits) was a primary driver here, helping to offset softness in the automotive and aerospace end markets. 
• Strength in the new home construction market provided a lift to the Safety & Industrial segment. Organic net sales in roofing granules saw a high-single-digit increase, while adhesives and tapes experienced a rebound in Q3, increasing by mid-single-digits.
• Meanwhile, Consumer remains the laggard as sluggish demand for home office, packaging, and consumer safety products continues to weigh on the segment. In Q3, organic sales for Consumer slipped lower by 2.0% yr/yr.
• After a flurry of restructuring activities, including thousands of layoffs and the spin-off of the healthcare unit this past April, MMM's productivity and efficiency has improved. This is reflected by its adjusted operating margin expanding by 1.4 percentage points yr/yr to 23.0%, helping to push adjusted EPS higher by 18% yr/yr. Additionally, after reaffirming its FY24 EPS guidance in mid-September, MMM raised its outlook to $7.20-$7.30 from its prior forecast of $7.00-$7.30.

The main takeaway is that MMM delivered a solid beat-and-raise earnings report despite a mixed landscape across its end markets. After several years of sub-par results, MMM is executing on a higher level now, but the company still faces plenty of challenges, including ongoing litigation issues related to its "forever chemicals" lawsuits.