Does 3M’s Recent $6B Settlement Signal an Opportunity for Investors in 2025?

If you have been watching 3M lately and wondering whether now is the right time to make a move with its stock, you are in good company. The share price has picked up some positive momentum, rising 1.0% over the past week and 3.0% over the last month. Even more impressive, the stock is currently 20.2% higher so far this year, and it is up a solid 21.0% over the past twelve months. These numbers certainly catch the eye, especially for anyone who remembers 3M’s challenges in previous years. With new optimism circulating around industrials and a more positive perception of risk in the broader market, 3M is back in focus for investors seeking both stability and growth potential. Of course, rising prices can get people talking, but seasoned investors know the real story often comes down to valuation. On that front, 3M currently scores a 3 out of 6 in undervaluation checks. This means it may not be an obvious bargain, but there are real pockets of value that can be found with careful analysis. So how can we get a clearer picture of whether the stock still offers good value, or if the recent run has already reflected much of the potential upside? In the next section, I will walk through some of the key valuation methods analysts use to assess companies like 3M, and explain what those approaches can and cannot reveal. At the end, I will introduce an even more effective perspective for understanding what 3M is really worth in today’s market. 3M delivered 21.0% returns over the last year. See how this stacks up to the rest of the Industrials industry.

Approach 1: 3M Cash Flows

The Discounted Cash Flow (DCF) model is a widely used valuation method that estimates how much a company's future cash flows are worth in today's dollars. It does this by projecting future Free Cash Flow (FCF) and discounting those amounts to the present. This process provides a measure of the company's intrinsic value.

Currently, 3M generated negative Free Cash Flow of -$2.32 Billion over the last twelve months, reflecting some ongoing challenges. Analysts expect this figure to improve rapidly, projecting FCF to reach $3.90 Billion by 2026 and to increase further to $5.62 Billion by 2035. Only five years of estimates are available from analysts, and further growth beyond that period is extrapolated by Simply Wall St to continue at a moderate pace.

Based on the two-stage DCF model, 3M’s estimated intrinsic value is $169.13 per share. This translates to a 7.9% undervaluation relative to the current share price and suggests the stock is trading almost exactly in line with its fair value.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for 3M.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out 3M's DCF analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: 3M Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation tool for profitable companies like 3M because it directly compares what investors are willing to pay for each dollar of current earnings. This makes it useful for gauging market expectations around growth and profitability. Generally, a higher PE ratio reflects expectations for faster earnings growth or lower risk. In contrast, a lower PE can signal either caution toward future results or potential value.

3M is currently trading at a PE ratio of 21x. This is above the broader Industrials industry average of 13x, but below the average PE of 26x among its listed peers. Numbers like these can be helpful for context, but by themselves they do not account for nuances such as 3M’s unique growth outlook, profit margins, or business risks.

This is where Simply Wall St’s proprietary Fair Ratio comes in. The Fair Ratio, calculated at 27x for 3M, factors in elements such as projected earnings growth, company size, profit margins, and risk profile. This makes it a more comprehensive benchmark than simply comparing industry or peer averages, which often overlook important company-specific strengths or weaknesses.

Comparing 3M’s current PE of 21x to its Fair Ratio of 27x suggests the stock is undervalued relative to what would be expected given its profile.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your 3M Narrative

Earlier, we mentioned a better way to understand valuation. Now, let’s introduce you to Narratives. A Narrative is a simple yet powerful tool that helps you link the company’s story—your viewpoint about its opportunities, risks, and industry context—to the numbers behind its financial forecasts and, ultimately, a fair value for the stock.

Available right on the Simply Wall St Community page and used by millions of investors, Narratives make it easy for anyone to blend their analysis of a company's future revenue, earnings, and margins with their assumptions to reach a data-backed price target. All of this is updated automatically when new news or results come in.

Narratives let you compare your own fair value estimate to the current share price, helping you decide if now is the right time to buy, sell, or wait. For example, some 3M Narratives today forecast a price target as high as $187, based on optimism about innovation and cost controls. Others warn of downside to $101, factoring in ongoing litigation and regulatory risks. In short, Narratives move your investing from guesswork to a confident, story-driven approach that evolves as new information emerges.

Do you think there's more to the story for 3M? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com