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It was a record top-line performance for diversified conglomerate 3M Company (MMM - Free Analyst Report) in the third quarter. Double-digit increases in four of the six operating segments enabled the company to notch a year-to-year sales advance of 11%, to $6.9 billion, which surpassed our expectation of $6.5 billion. Leading the charge was the Electro and Communications and Display and Graphics divisions. Both businesses benefited from healthy demand from the consumer electronics industry, specifically for components used in flat-screen televisions. New product development continues to drive performance, as well, helping the company shore up market-share gains in numerous areas.

On a geographic basis, 3M's emerging markets exposure continues to boost results. Overall sales in these countries increased 25% in the September interim, and the group now accounts for one-third of the company's total sales. And while business was booming in Korea, India, and China, sales were much less impressive in the United States (up 6%) and Europe (down 1%), as currency weighed down a 4% volume increase in the latter region.

All this translated to earnings of $1.53 a share, compared with the $1.37 netted in the year-earlier period and our estimate of $1.45. Operating margins remain healthy across all business segments, helping 3M achieve this bottom-line outperformance.

Any awe investors were feeling about these results, however, was quickly erased by the company's guidance update, as management trimmed $0.06 off the top end of its full-year forecast. It now looks for share net of $5.70-$5.74, which left Wall Street unimpressed, and shares of 3M traded slightly lower as a result.

Still, the company noted that this reduction is entirely related to the bevy of acquisitions 3M made in the third quarter. Indeed, it made a trio of purchases in the interval, adding Cogent, Attenti Holdings, and Arizant.

All things considered, we are maintaining our earnings estimate of $5.75 a share for 2010. Over the long haul, 3M seems poised to generate annual earnings gains in the high-single-digit percentage range.

Despite the issue's small pullback, its 3- to 5-year appreciation potential is still rather limited. Instead, an investment here is primarily a more conservative, income-oriented play. These shares hold our Highest rank (1) for Safety, a perfect score for Price Stability, and an above-average dividend yield.

About the Company: 3M, a component of the Dow Jones Industrial Average, is a diversified manufacturer that sells more than 50,000 products in 60 countries. Its six business segments include: Industrial & Transportation (31% of 2009 revenues); Display & Graphics (14%); Healthcare (19%); Consumer & Office (15%); Electro & Communications (9%); and Safety, Security & Protection (12%).

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.