MMM, 3M Company
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- A capital-intensive business, run on heavy physical assets that have to be kept working.
- What moves the needle
- How hard the assets work, and what the inputs cost. What decides it: utilization, how much of the capex merely keeps the assets running, and what a downturn does to a heavy fixed-cost base.
- Is it a good business?
- Return on capital has run in the teens (median 19%, above 15% in 8 of 10 years). Owner earnings agree: roughly 15% of revenue reaches owners as cash, consistently. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →56% of revenue comes from outside the United States.
- United States44%$10.9B
- Asia Pacific28%$7.1B
- EMEA17%$4.3B
- China/Hong Kong12%$3.0B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $30.1B | $31.7B | $32.8B | $32.1B | $32.2B | $35.4B | $26.2B | $24.6B | $24.6B | $24.9B | $25.0B |
| Operating marginOp. mgn | 23.3% | 24.3% | 22.0% | 19.2% | 22.3% | 20.8% | 16.7% | −43.4% | 19.6% | 18.6% | 19.1% |
| Net incomeNet inc. | $5.0B | $4.9B | $5.3B | $4.5B | $5.4B | $5.9B | $5.8B | ($7.0B) | $4.2B | $3.3B | $2.8B |
| EPS (diluted)EPS | $8.16 | $7.93 | $8.89 | $7.72 | $9.36 | $10.12 | $10.18 | $-12.63 | $7.55 | $6.00 | $5.23 |
| Owner earningsOwner earn. | $5.2B | $4.9B | $4.9B | $5.4B | $6.6B | $5.9B | $3.8B | $5.1B | $638M | $1.4B | $2.1B |
| ROICROIC | 26% | 19% | 23% | 16% | 18% | 19% | 14% | -44% | 24% | 20% | 26% |
| CapexCapex | $1.4B | $1.4B | $1.6B | $1.7B | $1.5B | $1.6B | $1.7B | $1.6B | $1.2B | $910M | $899M |
| Capex / revenueCapex/rev | 4.7% | 4.3% | 4.8% | 5.3% | 4.7% | 4.5% | 6.7% | 6.6% | 4.8% | 3.6% | 3.6% |
| Capex vs depreciationCapex/dep | 0.96× | 0.89× | 1.06× | 1.07× | 0.79× | 0.84× | 0.96× | 0.81× | 0.87× | 0.70× | 0.67× |
| Total debtDebt | $11.7B | $13.9B | $14.6B | $20.3B | $18.8B | $17.3B | $15.9B | $14.2B | $13.0B | $12.6B | $12.6B |
| Cash & investmentsCash+inv | $2.7B | $1.1B | $417M | $141M | $434M | — | — | — | — | — | $3.0B |
| Net debt / (cash)Net debt | $9.0B | $12.8B | $14.2B | $20.2B | $18.3B | $17.3B | $15.9B | $14.2B | $13.0B | $12.6B | $9.5B |
Owner’s Scorecard
Will it survive?
- AdequateOperating income $4.6B ÷ interest expense $946M
Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.
- ModerateTotal debt $12.6B ÷ operating income $4.6B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $9.8BMeaningful net debtCash $2.4B + ST investments $404M − debt $12.6B
Netting $2.8B of cash and short-term investments against $12.6B of debt leaves $9.8B owed, about 2.1× a year's operating profit, versus the gross figure above. It also holds $30M in longer-dated marketable securities; counting those, it sits at $9.8B of net debt. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Capital-hungryDSO 52 + DIO 89 − DPO 66 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- HighNOPAT $3.5B ÷ invested capital $14.9B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $1.4B = operating cash $2.3B − capex $910M
What an owner could take out without starving the business. That's 6% of revenue. Treating stock comp as the real expense it is (less $225M of SBC) leaves $1.2B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Mostly cash-backedCash from ops $2.3B ÷ net income $3.3B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns most of itDividends + buybacks $4.8B ÷ Owner Earnings $1.4B
Of $1.4B Owner Earnings, $4.8B (345%) went back to shareholders, $1.6B dividends, $3.3B buybacks. Net of $225M stock comp, the real buyback was about $3.0B. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.70×HarvestingCapex $910M ÷ depreciation $1.3B
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 9 of 10
Lost money in 1 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 8 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 23% (FY2016) → 19% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC returns capital
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Owner earnings growth −16%/yr
Free cash to owners shrank about 16% a year over the record.
- Worst year 2023 · −43.4% op. margin
Operations went underwater in 2023, understand why before trusting the good years.
- Share count −1.5%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
- Dividend record paid
Paid a dividend in 10 of the years on record.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $58.4B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a mature cash machine, most of what it earns goes straight back to owners.
- Reinvested$14.6B · 25%
- Dividends$29.0B · 50%
- Buybacks$21.2B · 36%
It reinvested $14.6B (25%) back into the business and returned $50.2B (86%) to owners, $29.0B in dividends, $21.2B in buybacks. Total debt rose $906M across the span. It returned and reinvested more than it generated, the gap was covered by debt or existing cash.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$225M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 5% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
2 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $24.9B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity NearCurrent ratio ≥ 2× · 1.71×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $12.6B vs $6.8B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability NearA profit every year (10-yr record) · 1 loss year
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −97%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $6.00/share and book value $8.69/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what 3M Company has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $2.1B on 533M diluted shares; net debt $9.5B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionBusiness
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“In 2025, persistent pricing pressure, tariffs and geopolitical uncertainty prompted producers to adjust capacity and restructure operations.”
From the recordOperating margin19.1% now (TTM), off a 24.3% peak (FY2017) - Concentrated dependenceRisk Factors
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Depending on the availability and feasibility of such third-party products not containing PFAS, the Company continues to evaluate circumstances in which the use of PFAS-containing products manufactured by third parties and used in certain applications in 3M's product portfolios will continue beyond …”
From the recordOwner-earnings margin at stake (TTM)8% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“The Company's financial condition and liquidity enable it to address these obligations by refinancing, redemption or some combination thereof. 3M has a $4.25 billion five-year revolving credit facility that expires in May 2028.”
From the recordBalance sheet (TTM)$9.8B meaningful net debt · interest covered 4.9× - Litigation & contingenciesBusiness
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“Government Regulation and Environmental Law Compliance : The Company's business operations are subject to various governmental regulations in the U.S. and internationally, including, among others, those related to product liability; securities and corporate governance; antitrust and competition; int…”
A judgment, not a number, weigh it against the filing yourself. - Regulation & policyMD&A
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Outside of special items, both GAAP and adjusted operating margins reflect benefits from growth, productivity, and lower restructuring costs (apart from the transformation costs special item), partially offset by growth investments and tariff impacts.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “(Billions) December 31, 2025 December 31, 2024 Foreign subsidiaries $ 3.5 $ 3.5 United States 2.4 4.2 Total cash, cash equivalents and marketable securities $ 5.9 $ 7.7 The decrease from December 31, 2024, was impacted by $3.4 billion in payments associated with PFAS-related environmental liabilitie…”
- “Business segment operating income margins decreased YoY due to challenging comparison against last year's strong share gains from spec-in wins and new product introductions in automotive and consumer electronics, continued growth investments in the business, and cost dis-synergies due to the exit of…”
- “Organic sales increased in roofing granules, industrial adhesives and tapes and in electrical markets due to strong demand for bonding solutions and residential roof replacements, were flat in automotive aftermarket and personal safety, and decreased in industrial specialties and abrasives as indust…”
- “These primarily included an increase in net costs for significant litigation impacting operating income from the 2025 PFAS-related New Jersey Settlement and updates to site remediation obligations (discussed in Note 17), partially offset by increased insurance recoveries; manufactured PFAS products …”
- “Although the Company maintains insurance coverage for various cybersecurity and business continuity risks, there can be no guarantee that all costs, damages, expenses or losses incurred will be fully insured nor reimbursed through insurance recoveries. *The Company's use of artificial intelligence t…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Medical devices
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| MDTMedtronic PLC | $33.5B | 65% | 17.8% | 7% | 15% |
| SYKStryker Corp | $25.1B | 64% | 19.5% | 10% | 17% |
| MMM3M Company | $24.9B | 40% | 18.6% | 24% | 6% |
| BDXBecton Dickinson & Co | $21.8B | 45% | 11.8% | 5% | 18% |
| BSXBoston Scientific Corp | $20.1B | 69% | 18.0% | 9% | 18% |
| BAXBaxter International Inc | $11.2B | 30% | -2.7% | -2% | 3% |
| ISRGIntuitive Surgical, Inc. | $10.1B | 66% | 29.3% | 18% | 25% |
| ZBHZimmer Biomet Holdings, Inc. | $8.2B | 70% | 13.3% | 5% | 18% |