3M's Transportation and Electronics Unit Grows in Q1: A Durable Trend?

3M Company’s MMM Transportation and Electronics segment showed signs of recovery in the first quarter of 2025, posting adjusted organic growth amid a complex demand environment. The segment’s adjusted organic revenues increased 1.1% on a year-over-year basis in the first quarter.

This modest growth was driven by strength in the transportation and aerospace end markets. Increase in demand for commercial aircraft, global fleet expansion and rising aftermarket activity have aided the segment’s performance. The advanced materials business also contributed positively in the quarter, fueled by key project wins across the industrial and infrastructure sectors and improved customer engagement.

These gains reflect MMM’s efforts to improve its go-to-market strategy, enhance operational execution and introduce new products. The company’s cross-selling opportunities, commercial excellence and improved supply-chain management also supported the segment’s results.

While the transportation business showed strong momentum, softness in the electronics business remains a concern. Lower demand for devices continues to weigh on the segment’s results. Despite modest growth in electronic bonding solutions, overall recovery in the electronics business is yet to gain traction.

While the Transportation and Electronics segment is starting to recover, a full turnaround will depend on steady demand in the electronics business. The progress is promising, but still uncertain.

Segmental Snapshot of MMM’s Peers

Among 3M’s major peers, Honeywell International Inc. HON is witnessing strength in its commercial aviation aftermarket business, driven by growth in air transport flight hours, higher shipset deliveries and supply-chain improvements. In the first quarter, Honeywell’s commercial aviation aftermarket sales increased 14% year over year. Strength in Honeywell’s defense and space business, owing to stable U.S. and international defense spending volumes, has also been proving beneficial.

Its another peer, ITT Inc.’s ITT Connect and Control Technologies segment is benefiting from growth in component and connector sales within the defense and industrial markets. Also, the acquisition of kSARIA augurs well for ITT’s segment. Revenues from the ITT’s unit rose 26.8% year over year on a reported basis and 1.4% organically in the first quarter of 2025.

The Zacks Rundown for MMM

Shares of 3M have gained 47.7% in the past year compared with the industry’s growth of 6%.

From a valuation standpoint, 3M is trading at a forward price-to-earnings ratio of 18.86X, above the industry’s average of 16.76X. MMM carries a Value Score of D.

The Zacks Consensus Estimate for MMM’s earnings has remained steady over the past 60 days.

MMM stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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