Soft Retail Markets Hurt 3M's Consumer Unit: Is a Turnaround Expected?

3M Company MMM has been grappling with weakness in its Consumer business segment. Softness in the consumer retail end markets, owing to cautious consumer discretionary spending and lower retailer inventory levels, has been a major concern for the segment. This is reflected in the Consumer segment’s organic sales, which decreased 2.1% in the second quarter of 2026, following a decline of 1.3% in the first quarter.

There has been a particular weakness in the packaging & expression and home improvement businesses. Amid this, the Federal Reserve’s cautious approach regarding interest rate adjustments, with the possibility of rate hikes to combat inflation, is expected to further delay the segment’s recovery. Consumer spending on hardline goods is expected to remain muted and hurt the segment’s performance in the near term.

Despite this, 3M is poised to benefit from the continued strength in its Safety and Industrial segment. Strong momentum in abrasives, industrial adhesives and tapes, specialties, roofing granules, personal safety and electrical markets bodes well for the company’s growth in the quarters ahead.

Segmental Performance of MMM’s Peers in Q2

Among 3M’s major peers, Carlisle Companies Incorporated CSL is experiencing strength in its Construction Materials segment. In second-quarter 2026, revenues from Carlisle’s Construction Materials segment increased 7.8% year over year to $1.18 billion. Organic revenues rose 7.7%, driven by healthy re-roofing demand, strategic initiatives and strong commercial execution, partly offset by continued softness in commercial new construction.

Another peer, Honeywell Technologies HON, is benefiting from increasing data center and hospitality projects across the Americas, India and the Middle East, which have been driving the Building Automation segment. Increasing order rates and capex investments in data centers and hospitality verticals bode well for it. In second-quarter 2026, the segment’s organic revenues increased 9% year over year.

The Zacks Rundown for MMM

Shares of 3M have gained 17.4% in the past three months against the industry’s decline of 18%.

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From a valuation standpoint, 3M is trading at a forward price-to-earnings ratio of 18.86X, above the industry average of 15.37X. MMM carries a Value Score of D.

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The Zacks Consensus Estimate for MMM’s earnings for 2026 and 2027 has increased 2.9% and 4.4%, respectively, in the past 60 days.

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MMM stock currently carries a Zacks Rank #2 (Buy). 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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