3M Had Great Earnings, So Why Is the Stock Down?

Exxon reported a modest beat—important to look at the earnings stream, because the profits are big. Upstream earnings—that's exploration and production of oil and gas $5.47 billion—$1.46 billion more than same period last year—this is the first full quarter with XTO included.

Higher crude oil a big help, the downstream is refining oil—gasoline, jet fuel, etc....here refining margins improved so they also saw an increase in earnings, even chemicals were solid.

Look at the stock—Exxon a big underperformer this year, posting modest gain today

If you want to watch a successful international company perform well, watch 3M. They beat on top and bottom line—a key point is that sales were up 11% on:

1) New products—they are huge innovators introducing many new products each year, and are a big global acquirer (they recently bought a tape company and a fly fishing company!)

2) Automotive & electronics is a big growth area—they make tapes, adhesives and coatings for cars and boats and planes

3) Emerging market sales were up 25%. emerging markets are now 34% of sales—40 percent growth in India this year! 48 percent in Korea, 32 percent in Russia, 31 percent in the China/Hong Kong region and 25 percent in Brazil!

So why is the stock down 5 percent? Several reasons: 1) they beat, but the 2 cent beat was modest, 2) they lowered the high end of their guidance due to acquisitions, and 3) it may be time for a rest. "The lack of upside results is consistent with our thesis that 3M has had its early-cycle run, driven by its short-cycle mix in early-cycle markets," Citi wrote in a note to clients.

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