Source: PaxForex Premium Analytics Portal, Fundamental Insight
3M shares (NYSE: MMM) fell 11.6% in the first half of 2020 according to S&P Global Market Intelligence. It is difficult to be too severe of the business because, as a diversified producer, it was bound to get kicked when the pandemic hit the economy.
It is an unpleasant circumstance for the company's investors since this year they would have seen the advantages of the restructuring of CEO Mike Roman. Unluckily, the losses from the coronavirus have so far disguised any significant changes.
The disappointing results of previous years have led to the company losing its premium rating in the industrial sector. As a result, investors were looking forward to some advances in 2020. In short, 3M has evolved from a high-quality industrial company with a premium rating to a value option in the industrial sector.
While there was an obvious indication that 3M did not deserve its premium rating in 2019, it may now be underestimated as opposed to its rivals.
That reasoning is especially appropriate as Roman seems to be serious about restructuring the firm. For instance, the company's business segments were decreased, and its business groups are now managed on a global basis. Meanwhile, 3M made achievements in the health sector in 2019 for $7.7 billion, and in 2020 sold its underperforming medicine delivery business for $650 million.
Traders should monitor the end markets of 3M as the company informs about sales trends every month. However, it will take some time to see if 3M's operations have changed. Thus, cautious traders will be ready to stay in the standby mode.
But a significant generation of cash flow of shares should limit the negative effect. Meanwhile, the significant possibility for Roman to restructure the company will undoubtedly draw attention to the company's shares.