3M stocks slides after full-year guidance disappoints

Shares of 3M (MMM) opened lower after the company issued full-year profit and sales guidance that was below Street expectations. However, 3M's fourth quarter earnings did top analyst estimates, with the company's health care spinoff still on track for the first half of 2024.

Yahoo Brad Smith and Seana Smith report explain the results.

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Editor's note: This article was written by Eyek Ntekim

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SEANA SMITH: All right, time for some of our trending tickers. First up, 3M. And look at that slide out of the open. We're looking at losses of just about 6%. This coming after 3M gave full year guidance for profit and sales that fell below the Street's expectations.

They talked about lackluster demand that that is continuing to weigh on the company. We're seeing that reflected in the guidance here from 3M. For the fourth quarter earnings though, they did beat the Street's expectations, driven by some of the strength from their restructuring push that they're doing in order to streamline some of the company's operations.

And looking ahead down the line here in terms of what 3M is going to look like as they do streamline some of their operations here, Brad. They are spinning off their health care unit. That's on track to be completed in the first half of the year. So again, that guidance, though, really overriding any sort of good news from its most recent quarterly earnings report.

And it's also a similar theme to really what we have been seeing playing out in terms of share reaction and share price reaction to some of these results. If they're not beating expectations by a wide margin, a lot of time, you're seeing some of that downside pressure.

BRAD SMITH: Yeah, when you look at some of the hits that we've seen, at least on the revenue and sales side, where ultimately, the company did report sales down by about 8/10 of a percent, year-over-year organic sales decline of about 1.9%, it kind of draws me back to some of the data that we had heard from FactSet, and that we had talked about at the beginning of the show, when we were mentioning the fact that this earnings season is going to be critical to tie into some of the all time highs, and whether or not that continues, at least, in full force in the near term.

One of the huge things that jumped out to me, particularly is how this passes through to the actual net profit margin for the quarter. It is expected by FactSet that if 10.7% is the actual net profit margin for the quarter, it's actually going to mark the lowest net profit margin reported by the index, the S&P 500, since the second quarter of 2020.

Where were you when-- we all remember where we were. We were at home. So at the--

SEANA SMITH: We weren't doing much.

BRAD SMITH: --end the day, we weren't doing much. However, 3M was shining during that time--

SEANA SMITH: Exactly.

BRAD SMITH: --making a lot of masks. So as you mentioned, this is going to be a company that looks vastly different once they spin off that health care division. And we'll see how some of the Street has to recalibrate the way that we evaluate this company as well.