3M (NYSE: MMM) and Illinois Tool Works (NYSE:ITW) are both large-cap multi-sector conglomerates companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitabiliy, earnings, valuation and risk.
Risk & Volatility
3M has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, Illinois Tool Works has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.
Insider & Institutional Ownership
65.8% of 3M shares are owned by institutional investors. Comparatively, 74.8% of Illinois Tool Works shares are owned by institutional investors. 0.6% of 3M shares are owned by insiders. Comparatively, 0.9% of Illinois Tool Works shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares 3M and Illinois Tool Works’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|3M||$30.53 billion||4.04||$8.53 billion||$8.77||23.54|
|Illinois Tool Works||$13.96 billion||3.47||$3.70 billion||$6.18||22.77|
3M has higher revenue and earnings than Illinois Tool Works. Illinois Tool Works is trading at a lower price-to-earnings ratio than 3M, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations for 3M and Illinois Tool Works, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Illinois Tool Works||0||6||6||0||2.50|
3M currently has a consensus price target of $201.50, suggesting a potential downside of 2.41%. Illinois Tool Works has a consensus price target of $152.18, suggesting a potential upside of 8.14%. Given Illinois Tool Works’ stronger consensus rating and higher probable upside, analysts clearly believe Illinois Tool Works is more favorable than 3M.
This table compares 3M and Illinois Tool Works’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Illinois Tool Works||15.50%||46.57%||13.69%|
3M pays an annual dividend of $4.70 per share and has a dividend yield of 2.3%. Illinois Tool Works pays an annual dividend of $2.60 per share and has a dividend yield of 1.8%. 3M pays out 53.6% of its earnings in the form of a dividend. Illinois Tool Works pays out 42.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. 3M has raised its dividend for 53 consecutive years and Illinois Tool Works has raised its dividend for 58 consecutive years.
3M beats Illinois Tool Works on 9 of the 16 factors compared between the two stocks.
3M Company Profile
3M Company is a technology company. It operates through five segments. The Industrial segment serves a range of markets, such as automotive original equipment manufacturer and automotive aftermarket, electronics, appliance, paper and printing, packaging, food and beverage, and construction. The Safety and Graphics segment serves a range of markets for the safety, security and productivity of people, facilities and systems. The Health Care segment serves markets that include medical clinics and hospitals, pharmaceuticals, health information systems, and food manufacturing and testing. The Electronics and Energy segment serves customers in electronics and energy markets, including solutions for the performance of electronic devices; electrical products, including infrastructure protection, and power generation and distribution. The Consumer segment serves markets that include consumer retail, office business to business, home improvement, drug and pharmacy retail, and other markets.
Illinois Tool Works Company Profile
Illinois Tool Works Inc. is a manufacturer of industrial products and equipment. The Company operates through seven segments. The Automotive OEM segment produces components and fasteners for automotive-related applications. The Food Equipment segment offers commercial food equipment. The Test & Measurement and Electronics segment produces test and measurement, and electronic manufacturing and maintenance, repair and operations (MRO) solutions. The Welding segment produces welding equipment, consumables and accessories for industrial and commercial applications. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment supplies engineered fastening systems and solutions. The Specialty Products segment produces beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners.
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