Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Statement of Comprehensive Income
- Cash Flow Statement
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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Profitability Ratios (Summary)
3M Co., profitability ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Gross Profit Margin
- The gross profit margin experienced fluctuations over the five-year period, starting at 49.46% in 2017 and ending at a slightly lower 46.84% in 2021. A notable decline occurred in 2019, reaching 46.68%, followed by a moderate recovery in 2020 to 48.41%, before decreasing again in 2021. This indicates some variability in the cost of goods sold relative to revenues, affecting profitability at the gross level.
- Operating Profit Margin
- The operating profit margin showed a downward trend overall, beginning at 24.7% in 2017 and declining to 20.84% in 2021. The lowest point was observed in 2019 at 19.21%. A partial recovery took place in 2020 (22.25%), but this was not sustained into 2021. This pattern suggests increasing operating expenses or cost pressures impacting operational efficiency over time.
- Net Profit Margin
- The net profit margin demonstrated relative stability, with minor fluctuations throughout the period. It started at 15.35% in 2017, peaked at 16.75% in 2021, and recorded the lowest value of 14.22% in 2019. The net margin improved notably in 2020 and 2021, which may indicate effective management of non-operating items or tax efficiencies despite earlier operating challenges.
- Return on Equity (ROE)
- ROE showed a marked peak in 2018 at 54.6%, followed by a declining trajectory to 39.35% by 2021. This decrease over the four years reflects reduced profitability relative to shareholder equity, possibly due to lower net income or increased equity base, signaling a decline in overall shareholder returns.
- Return on Assets (ROA)
- ROA was highest in 2018 at 14.65% but dropped to a low of 10.23% in 2019. Subsequently, it trended upward, reaching 12.58% in 2021. This recovery suggests improved asset utilization after 2019, although it remains below the peak performance observed in 2018.
Return on Sales
Return on Investment
Gross Profit Margin
3M Co., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Gross Profit
- The gross profit exhibited fluctuations during the five-year period. Starting at 15,656 million US dollars in 2017, it increased slightly to 16,083 million in 2018 before experiencing a decline to 15,000 million in 2019. Subsequently, it rebounded to 15,579 million in 2020 and further increased to 16,560 million in 2021, indicating a recovery and growth towards the end of the period.
- Net Sales
- Net sales showed a generally upward trend over the same period, beginning at 31,657 million US dollars in 2017 and increasing steadily to 32,765 million in 2018. A slight dip to 32,136 million occurred in 2019, followed by a relatively stable figure of 32,184 million in 2020. In 2021, net sales experienced a more notable increase, reaching 35,355 million, marking the highest point in the series.
- Gross Profit Margin
- The gross profit margin percentage demonstrated a downward trend overall. It started at 49.46% in 2017 and slightly decreased to 49.09% in 2018. A more pronounced decline occurred in 2019 when the margin dropped to 46.68%. There was a moderate improvement in 2020 to 48.41%, but this was followed by another decrease to 46.84% in 2021. This pattern suggests that while sales and gross profit values increased, the efficiency or cost structure underlying gross profit generation may have been under pressure during the period.
Operating Profit Margin
3M Co., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Operating Profit Margin, Sector | ||||||
| Capital Goods | ||||||
| Operating Profit Margin, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income shows a general downward trend from 2017 to 2019, decreasing from $7,820 million to $6,174 million. In 2020, operating income rebounded to $7,161 million and increased slightly again in 2021 to $7,369 million, though it did not return to the peak levels observed in 2017.
- Net Sales
- Net sales exhibited moderate growth over the five-year period. The values rose from $31,657 million in 2017 to $32,765 million in 2018, followed by a slight dip to $32,136 million in 2019. Sales stabilized in 2020 at $32,184 million and then showed a more substantial increase reaching $35,355 million in 2021.
- Operating Profit Margin
- The operating profit margin declined significantly from 24.7% in 2017 to 19.21% in 2019. A partial recovery occurred in 2020 with the margin rising to 22.25%, though it decreased slightly to 20.84% in 2021. Despite fluctuations, the margin in 2021 remained below the levels recorded at the start of the period.
- Overall Analysis
- Over the course of these five years, the operating income and operating profit margin experienced an initial decline followed by a partial recovery, while net sales grew steadily. This suggests that although sales increased, profit efficiency was under pressure, particularly between 2017 and 2019. The improvement in 2020 and maintenance in 2021 indicate some operational resilience, yet operating profitability has not fully returned to the earlier high levels.
Net Profit Margin
3M Co., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to 3M | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Net Profit Margin, Sector | ||||||
| Capital Goods | ||||||
| Net Profit Margin, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net profit margin = 100 × Net income attributable to 3M ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income attributable to the company showed a fluctuating yet generally upward trend over the five-year period. It increased from $4,858 million in 2017 to $5,349 million in 2018, experienced a decline to $4,570 million in 2019, then rose significantly to $5,384 million in 2020 and further to $5,921 million in 2021, indicating recovery and sustained profitability growth after the dip in 2019.
- Net Sales
- Net sales exhibited moderate variability over the years. There was a growth from $31,657 million in 2017 to $32,765 million in 2018, followed by a slight decrease to $32,136 million in 2019 and stabilization at $32,184 million in 2020. A notable increase was observed in 2021, reaching $35,355 million. This pattern suggests steady sales performance with a significant boost in the latest year.
- Net Profit Margin
- The net profit margin percentage reflects an overall stable profitability ratio, with some fluctuations. Starting at 15.35% in 2017, it rose to 16.33% in 2018, dipped to 14.22% in 2019, increased again to 16.73% in 2020, and remained steady at 16.75% in 2021. The decrease in 2019 aligns with the decline in net income that year, whereas subsequent increases indicate improved operational efficiency or cost management.
- Summary
- Across the observed period, financial performance metrics indicate resilience and growth, particularly after the 2019 dip. Both net income and net sales generally trended upward, with 2021 showing the highest values in the series. The net profit margin corresponded with income trends, suggesting effectiveness in converting sales to profit improved after 2019. Overall, the company demonstrated a capacity to rebound and enhance profitability by 2021.
Return on Equity (ROE)
3M Co., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to 3M | ||||||
| Total 3M Company shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| ROE, Sector | ||||||
| Capital Goods | ||||||
| ROE, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROE = 100 × Net income attributable to 3M ÷ Total 3M Company shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to 3M
- The net income demonstrates a general upward trend over the five-year period. Starting at $4,858 million in 2017, it increased to $5,349 million in 2018, then experienced a decline to $4,570 million in 2019. Subsequently, the net income rose again, reaching $5,384 million in 2020 and further increasing to $5,921 million in 2021. This pattern indicates some volatility but overall positive growth in profitability.
- Total Shareholders’ Equity
- The total shareholders’ equity shows variability but an overall increasing trend. The equity started at $11,563 million in 2017 and decreased significantly to $9,796 million in 2018. It then recovered slightly to $10,063 million in 2019, followed by more substantial increases to $12,867 million in 2020 and $15,046 million in 2021. This indicates strengthening financial stability and enhanced shareholder value in the latter years.
- Return on Equity (ROE)
- Return on equity exhibits a fluctuating but declining pattern over the period reviewed. The highest ROE was recorded in 2018 at 54.6%, rising from 42.01% in 2017. After this peak, ROE steadily decreased to 45.41% in 2019, 41.84% in 2020, and further to 39.35% in 2021. Despite consistent net income growth in recent years, the decline in ROE suggests that the increase in equity base has outpaced earnings growth, resulting in lower efficiency in equity utilization.
- Overall Financial Insights
- The company experienced growth in net income alongside an increase in shareholders’ equity, particularly from 2019 onward. However, the decreasing ROE indicates reduced profitability relative to shareholder investments. This could reflect a strategic expansion or reinvestment approach, with equity growth exceeding earnings gains. Monitoring the relationship between earnings and equity in the upcoming periods will be essential to evaluate the sustainability of returns to shareholders.
Return on Assets (ROA)
3M Co., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to 3M | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| ROA, Sector | ||||||
| Capital Goods | ||||||
| ROA, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROA = 100 × Net income attributable to 3M ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to 3M
- Net income experienced fluctuations over the observed period. Starting at 4,858 million USD in 2017, it rose to 5,349 million USD in 2018, followed by a decline to 4,570 million USD in 2019. Subsequently, it increased again to 5,384 million USD in 2020 and further to 5,921 million USD in 2021. This indicates a generally positive trend with a temporary dip in 2019.
- Total Assets
- Total assets showed variability, beginning at 37,987 million USD in 2017 and slightly decreasing to 36,500 million USD in 2018. There was a marked increase to 44,659 million USD in 2019, followed by continuous growth reaching 47,344 million USD in 2020. In 2021, total assets slightly decreased to 47,072 million USD, indicating a period of asset expansion with a minor contraction at the end.
- Return on Assets (ROA)
- ROA exhibited a pattern consistent with the net income fluctuations. It started at 12.79% in 2017, increased to a peak of 14.65% in 2018, then decreased to 10.23% in 2019. It recovered somewhat to 11.37% in 2020 and improved further to 12.58% in 2021. This reflects varying efficiency in asset utilization to generate earnings across the years.