Analyzing 3M (NYSE:MMM) and Sumitomo (OTCMKTS:SSUMY)

Sumitomo (OTCMKTS:SSUMY) and 3M (NYSE:MMM) are both large-cap multi-sector conglomerates companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.

Analyst Ratings

This is a breakdown of recent ratings for Sumitomo and 3M, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sumitomo	0	0	0	2	4.00
3M	1	3	7	0	2.55

3M has a consensus price target of $175.40, suggesting a potential upside of 9.41%. Given 3M’s higher possible upside, analysts plainly believe 3M is more favorable than Sumitomo.

Institutional and Insider Ownership

65.3% of 3M shares are held by institutional investors. 0.3% of 3M shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Sumitomo pays an annual dividend of $0.68 per share and has a dividend yield of 1.9%. 3M pays an annual dividend of $2.92 per share and has a dividend yield of 1.8%. Sumitomo pays out 20.1% of its earnings in the form of a dividend. 3M pays out 46.6% 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 increased its dividend for 1 consecutive years. Sumitomo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Sumitomo has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500. Comparatively, 3M has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Profitability

This table compares Sumitomo and 3M’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sumitomo	8.34%	12.31%	5.19%
3M	13.70%	98.47%	11.05%

Earnings and Valuation

This table compares Sumitomo and 3M”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sumitomo	$47.89 billion	0.88	$3.75 billion	$3.39	10.30
3M	$24.58 billion	3.47	$4.17 billion	$6.26	25.61

3M has lower revenue, but higher earnings than Sumitomo. Sumitomo is trading at a lower price-to-earnings ratio than 3M, indicating that it is currently the more affordable of the two stocks.

Summary

3M beats Sumitomo on 13 of the 18 factors compared between the two stocks.

About Sumitomo

Sumitomo Corporation engages in general trading business worldwide. It operates through six segments: Metal Products; Transportation & Construction Systems; Infrastructure; Media & Digital; Living Related & Real Estate; and Mineral Resources, Energy, Chemical & Electronics. The company provides steel sheets and tubular products; and manufactures, leases, sells, services, and finances ships, aircrafts, motor vehicles, construction equipment, and components and parts. It is involved in the development of renewable energy projects comprising power generation and power plant engineering, procurement, and construction activities; electricity retail; industrial facilities and equipment, water, transportation systems and infrastructure, airports, smart city project, environmental solutions, and storage battery businesses; development and operation of industrial parks; arranging insurance; and provision of logistics services. In addition, the company engages in the cable television, 5G related technologies, programming distribution, movies, digital media and video content, TV shopping, and e-commerce businesses; cell phone, ICT platform, digital solution, and venture capital businesses; provision of smart communications infrastructure; operation of food supermarkets and drugstore chains; trade of cement and building materials; and real estate businesses. Further, it develops and trades in coal, iron ore, manganese, uranium, non-ferrous and precious metals, petroleum, natural gas and liquefied natural gas, and commodity derivative transactions; trades in non-ferrous metal products, liquefied petroleum gas, storage batteries, carbon products, plastics, organic and inorganic chemicals, silicon wafers, LEDs, pharmaceuticals, agricultural chemicals, household insecticides, fertilizers, and veterinary drugs; engages in the investing activities; and provides electronics manufacturing services. Sumitomo Corporation was incorporated in 1919 and is headquartered in Tokyo, Japan.

About 3M

3M Company provides diversified technology services in the United States and internationally. The company’s Safety and Industrial segment offers industrial abrasives and finishing for metalworking applications; autobody repair solutions; closure systems for personal hygiene products, masking, and packaging materials; electrical products and materials for construction and maintenance, power distribution, and electrical original equipment manufacturers; structural adhesives and tapes; respiratory, hearing, eye, and fall protection solutions; and natural and color-coated mineral granules for shingles. Its Transportation and Electronics segment provides ceramic solutions; attachment/bonding products, films, sound, and temperature management for transportation vehicles; premium large format graphic films for advertising and fleet signage; light management films and electronics assembly solutions; packaging and interconnection solutions; semiconductor production materials; data centers solutions; and reflective signage for highway, and vehicle safety. The company’s Consumer segment provides consumer bandages, braces, supports, and consumer respirators; home cleaning products; retail abrasives, paint accessories, car care DIY products, picture hanging, and consumer air quality solutions; and stationery products. It offers its products through e-commerce and traditional wholesalers, retailers, jobbers, distributors, and dealers. 3M Company was founded in 1902 and is headquartered in Saint Paul, Minnesota.