Latest news with #materialsScience
Yahoo
6 days ago
- Business
- Yahoo
3M Co: A company with a sound balance sheet, and mixed shareholder distributions.
Investment Thesis Although the legal ramifications of 3M's production of perfluoroalkyl substances (PFAS) are unclear, the risks have been mitigated by settlements and the Solventum spinoff. The company is a materials science company that produces cutting-edge products like ceramic composites for aircraft engines, traffic signs, overhead projectors, and electronic displays using microreplication technology. Because 3M's technology is hard to copy and its proprietary secrets are tightly guarded, its prices are 10% to 30% higher than those of the competition. In addition to providing economies of scope, 3M's ability to adapt its technology into a variety of use cases lowers overall unit costs and boosts gross margins. With modest margin expansion primarily from operating leverage, 3M can grow its organic top line by 2% to 3% annually after the Solventum spinoff. Although 3M has some growth initiatives, especially in automotive electrification, the company's intrinsic value has been diminished during the tenure of its previous CEO, Mike Roman. Other key industries, like home filtration products and personal safety gear, ought to keep expanding in line with GDP. Warning! GuruFocus has detected 5 Warning Signs with MMM. Notable Guru Holding Why Gurus Like 3M Least It is profoundly baffling that none of the top Gurus an exposure of even a percentage in 3M. Additionally the gurus who have the most exposure are traditional long/short hedge funds, who often times focus on the catalyst present in the immediate times these kind of hedge funds engage in sophisticated derivative trades which mandates them take a position in a stock to fully execute the trade. One possible explanation, apart from the legal battles, why deep value investors like Bill Ackman (Trades, Portfolio), Warren Buffett (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio)t themselves at an arm's length from 3M's stock could be its oblivion status of its cash flow. Over the past five years its free cash flow tanked by 90%. And this coincided with the dip in its dividend payout ratio which is down by 20% over the same period. For value investors, a smooth and organic mobility of cash from between holdings in their portfolio is the cornerstone of their investment philosophy. And for a company as big ( $75 billion market cap) and as matured (123 years old), a 90% dip in free cash flow in the past 5 years is a gigantic red flag for deep value investors. Investment Upsides Strong brands like Scotch masking and painter's tape, Filtrete air filters, and Command hanging solutions give 3M's construction and home improvement division a broad moat. With the invention of Scotch masking tape in 1925 and Scotch cellulose tape five years later, these brands have a lengthy history. 3M uses its adhesive technology in a number of products, including duct tape, hanging clips and hooks, toilet paper holders, drywall picture hangers, and fasteners for mounting tools, securing seat cushions, and holding down a broad but eroding moat, the consumer divisionwhich includes office supplies and stationeryearns high profits but is predicted to decline as the world grows more digital. With a 77% global market share for sticky notes, companies like Post-it have a strong hold on consumers' minds. Customers may trade down for less expensive options, but no single product in the consumer segment controls the majority of sales. Slow technological advancements in many of its markets are the reason for 3M's low risk of obsolescence. For instance, only slight, incremental technological advancements have been made during the more than 120 years that 3M's abrasives business has been in operation. Price is a secondary consideration behind factors like product availability, defect rate, and customer support because 3M's non-consumer products make up a small portion of a customer's overall budget but have a high associated cost of failure. But over the past five years, 3M's organic growth has significantly slowed, forcing it to rely on acquisitions, which have had varying degrees of success. Acquisitions that have fallen short of growth expectations include Capital Safety and Scott Safety, as well as M*Modal, a sizable purchase of what the company considers to be a weakly competitive company. The company may be having trouble passing on rising input costs to customers, which is why the decline in organic growth and declining gross margins are concerning. Many of 3M's products have been surpassed by rivals, who have gradually eroded its market share. Quantitative returns have also demonstrated competitive disruption, with peers' excess margins decreasing. Declining excess returns on capital are a result of 3M's large acquisitions and waning earning power. The remaining liabilities of 3M, including property damage, environmental, personal injury, and non-US-based damages, come to about $10 billion in the worst-case scenario. 3M would still easily surpass its hurdle rate and generate low-double-digit returns in such a scenario. In the worst-case situation, though, 3M's legal obligations might outweigh its assessment of the company's equity worth. Due to its cost advantage and intangible assets, 3M's transportation safety division, which is well-known for producing reflective road signage, has a narrow moat. The division's products are essential to maintaining driver safety, and 3M's size and pooled technology help to sustain its technological superiority and cost advantage. The division's products divert attention from price by saving customers more money than the product itself costs. According to a 2016 study by the US Department of Transportation, for every $1 invested in a sign upgrade program, $53 in lower crash costs were to the safety and industrial segment, which has historically produced high-teens returns on invested capital, the transportation and electronics segment sells a larger percentage of its products directly to consumers. With an average return on invested capital in the mid to high 20s, 3M's consumer segment is the company's only wide-moat segment and yields the highest returns. Because of its powerful brands and cost advantage from economies of scale and scope, the home, health, and auto care division deserves a wide moat rating. Another benefit for leading consumer brands is that they continue to dominate both digital and physical retail shelf space. Intrinsic Valuation Based on the time value of money and a positive assessment of 3M's long-term margin and revenue growth prospects, the company's intrinsic value stands at $93.82 per share making it significantly overvalued. In comparison to its peers in the US multi-industrial category, the company is valued at 13 times 2025 adjusted EPS, which represents a substantial discount. The contradiction could be explained by the stagnant free cashflow generated by 3M past few years. This was primarily due to the increased Capex investments and unchanged dividend payouts past few years which has hurt their free cash flow generation. And the GF valuation puts a great weightage to free cash flow generation, as it should. However, the consistently improving operating margin makes a strong argument why 3M's stock trades at such a low P/E. Over the long run, 3M's top line is anticipated to grow organically by 2%3% due to share buybacks, operating leverage margin improvements, and efficiency gains.3M is confident in its liquidity position to fund its dividend and no longer needs to take on additional debt, despite the company's unimpressive growth profile and legal uncertainties. The company broke its 64-year dividend growth streak to pay for its legal settlements, and in the worst-case scenario, it is expected to face nearly $10 billion more in PFAS-related legal the company continues to reduce its portfolio, 3M's more confident investments, like automotive electrification, should pay off. It is anticipated that the company's core businessespersonal protective equipment (PPE), industrial adhesives, automotive, and home improvement productswill continue to contribute and, in their opinion, grow more quickly than the GDP. Growing employee health and safety laws as well as increased manufacturing and construction activity in developing nations are driving the PPE market. Investment Downsides Because of the uncertainty surrounding potential future litigation pertaining to PFAS, a group of approximately 15,000 chemicals, 3M has been assigned a Very High Uncertainty Rating. More than 98% of Americans' blood and the water supplies in the US and Europe contain PFAS. Even though 3M intends to stop producing PFAS by 2025, it might continue to use PFAS-containing supplies after that year. Personal injuries, which could be substantial given the link between PFAS and high cholesterol, thyroid disorders, childhood developmental problems, and an elevated risk of cancer, are not taken into consideration in current settlements. According to a study by Obsekov, Kahn, and Trasande, the annual health costs in the US alone linked to PFAS exposure have an upper bound of $62.6 billion and a lower bound of $5.5 billion. Although estimating 3M's legal risks is extremely uncertain, both of the current settlements can be absorbed by the balance sheet. Since 1970, 3M has developed a risky practice of stifling negative research, which calls into question the company's culture and possible hidden hazards. Portfolio Management Over the past 20 years, 3M's R&D expenditures have stayed consistent at about 6% of sales, but the company's return on investment has fluctuated. 3M continues to prioritize above-average spending on product innovation, as evidenced by peer R&D spending, which averages about 3.5% of sales. The business has occasionally made acquisitions with subpar outcomes, but it could do better by taking advantage of the fragmented nature of many markets. Since 3M's healthcare division had the lowest return on investment and the fewest manufacturing synergies with other divisions, it was a smart decision to spin it off. In an effort to improve operational efficiency, the company has also taken a variety of actions, such as mass layoffs and a reduction in the footprint of its corporate and manufacturing buildings. The fair value estimate has decreased as a result of 3M's 1.8% annual share count reduction over the past 20 years. Because end markets are mature and there are significant legal uncertainties, 3M's revised dividend payout ratio of about 40% is appropriate. With 3M's remaining 20% stake and a $7.7 billion "midnight" dividend from Solventum, 3M should have enough cash on hand to cover its legal obligations and pay its updated dividend. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
26-05-2025
- Business
- Yahoo
Arkema Completes 400 Million Euros Undated Hybrid Bond Issuance
Arkema S.A. ARKAY recently announced the completion of a €400 million undated hybrid bond issuance, featuring an annual coupon rate of 4.25% and an initial call date after five funds raised will primarily be used to refinance one of Arkema's two existing hybrid bonds, valued at €300 million, which has a first call date scheduled for Jan. 21, 2026. This transaction supports the company's strategy to diversify its financing its strong expertise in materials science, Arkema delivers a high-quality range of technologies designed to meet the increasing global demand for innovative and sustainable materials. With a strategic focus on becoming a pure Specialty Materials player, the company is organized into three synergistic and forward-looking segments: Adhesive Solutions, Advanced Materials and Coating Solutions. These segments represented approximately 92% of Arkema's total sales in 2024. In addition, the company maintains a strong and competitive Intermediates develops advanced technological solutions aimed at addressing key global challenges such as renewable energy, water accessibility, recycling, urban development and sustainable mobility. It maintains ongoing engagement with all its stakeholders. In 2024, the company generated around €9.5 billion in of Arkema have lost 30.9% over the past year compared with a 29.4% decline of its industry. Image Source: Zacks Investment Research ARKAY currently carries a Zacks Rank #4 (Sell).Better-ranked stocks in the basic materials space include Carpenter Technology Corporation CRS, Alamos Gold Inc. AGI and Hawkins, Inc. HWKNCarpenter Technology currently carries a Zacks Rank #2 (Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 11.1%. The company's shares have soared 110% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks Zacks Consensus Estimate for Alamos Gold current-year earnings is pegged at $1.29 per share. AGI, carrying a Zacks Rank #1, surpassed the Zacks Consensus Estimate in two of the trailing four quarters, while missing twice, with an average earnings surprise of 1.4%. The company's shares have rallied 58.1% in the past which currently carries a Zacks Rank #2, beat the consensus estimate in one of the trailing four quarters, while missing thrice. In this time frame, it has delivered an earnings surprise of roughly 8.2%, on average. The company's shares have rallied 43.6% in the past year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carpenter Technology Corporation (CRS) : Free Stock Analysis Report Arkema SA (ARKAY) : Free Stock Analysis Report Alamos Gold Inc. (AGI) : Free Stock Analysis Report Hawkins, Inc. (HWKN) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Wall Street Journal
16-05-2025
- Science
- Wall Street Journal
MIT Says It No Longer Stands Behind Student's AI Research Paper
The Massachusetts Institute of Technology said Friday it can no longer stand behind a widely circulated paper on artificial intelligence written by a doctoral student in its economics program. The paper said that the introduction of an AI tool in a materials-science lab led to gains in new discoveries, but had more ambiguous effects on the scientists who used it.
TechCrunch
12-05-2025
- Business
- TechCrunch
InventWood is about to mass-produce wood that's stronger than steel
It sounds like the stuff of science fiction, but it actually comes from a lab in Maryland. In 2018, Liangbing Hu, a materials scientist at the University of Maryland, devised a way to turn ordinary wood into a material stronger than steel. It seemed like yet another headline-grabbing discovery that wouldn't make it out of the lab. 'All these people came to him,' said Alex Lau, CEO of InventWood, 'He's like, OK, this is amazing, but I'm a university professor. I don't know quite what to do about it.' Rather than give up, Hu spent the next few years refining the technology, reducing the time it took to make the material from more than a week to a few hours. Soon, it was ready to commercialize, and he licensed the technology to InventWood. Now, the startup's first batches of Superwood will be produced starting this summer. 'Right now, coming out of this first-of-a-kind commercial plant — so it's a smaller plant — we're focused on skin applications,' Lau said. 'Eventually we want to get to the bones of the building. Ninety percent of the carbon impact from buildings is concrete and steel in the construction of the building.' To build the factory, InventWood has raised $15 million in the first close of a Series A round. The round was led by the Grantham Foundation with participation from Baruch Future Ventures, Builders VC, and Muus Climate Partners, the company exclusively told TechCrunch. Exhibit at TechCrunch Sessions: AI Secure your spot at TC Sessions: AI and show 1,200+ decision-makers what you've built — without the big spend. Available through May 9 or while tables last. Berkeley, CA | June 5 BOOK NOW InventWood's Superwood product starts with regular timber, which is mostly composed of two compounds, cellulose and lignin. The goal is to strengthen the cellulose already present in the wood. 'The cellulose nanocrystal is actually stronger than a carbon fiber,' Lau said. The company treats it with 'food industry' chemicals to modify the lignin in the wood, he said, and then compresses the result to increase the hydrogen bonds between cellulose molecules. 'We might densify the material by 4x and you might think, 'Oh, it'll be four times strong, because it has four times the fiber.' But it's actually more like 10 times stronger because of all these extra bonds that get created,' Lau said. The result is a material that has 50% more tensile strength than steel with a strength-to-weight ratio that's 10 times better, the company said. It's also Class A fire rated, or highly resistant to flame, and resistant to rot and pests. With some polymer impregnated, it can be stabilized for outdoor use like siding, decking, or roofing. InventWood's first products will be facade materials for commercial and high-end residential buildings, Lau said. Compressing the material also concentrates the colors. 'You end up with something that looks like these richer, tropical hardwoods,' he added. Ultimately, InventWood is planning to use wood chips to create structural beams of any dimension that won't need finishing. 'Imagine your I-beams look like this,' Lau said, holding up a sample of Superwood. 'They're beautiful, like walnut, ipe. These are the natural colors. We haven't stained any of this.' Topics buildings Climate construction materials Exclusive materials science Tim De Chant Senior Reporter, Climate Tim De Chant is a senior climate reporter at TechCrunch. He has written for a wide range of publications, including Wired magazine, the Chicago Tribune, Ars Technica, The Wire China, and NOVA Next, where he was founding editor. De Chant is also a lecturer in MIT's Graduate Program in Science Writing, and he was awarded a Knight Science Journalism Fellowship at MIT in 2018, during which time he studied climate technologies and explored new business models for journalism. He received his PhD in environmental science, policy, and management from the University of California, Berkeley, and his BA degree in environmental studies, English, and biology from St. Olaf College. View Bio May 13, 2025 London, England Get inside access to Europe's top investment minds — with leaders from Monzo, Accel, Paladin Group, and more — plus top-tier networking at StrictlyVC London. REGISTER NOW Most Popular Congressman is investigating fintech Ramp's attempt to win $25M federal contract Mercury's CEO formalizes bets on early-stage founders with a $26M fund Google launches new initiative to back startups building AI Saudi prince launches AI venture as Trump, Musk, Altman, and Zuckerberg arrive for conference Sam Altman apparently does not respect olive oil OpenAI's Stargate project reportedly struggling to get off the ground, thanks to tariffs GM taps Aurora co-founder for new chief product officer role Loading the next article Error loading the next article
TechCrunch
12-05-2025
- Business
- TechCrunch
InventWood is about to mass produce wood that's stronger than steel
It sounds like the stuff of science fiction, but it actually comes from a lab in Maryland. In 2018, Liangbing Hu, a materials scientist at the University of Maryland, had devised a way to turn ordinary wood into a material stronger than steel. It seemed like yet another headline grabbing discovery that wouldn't make it out of the lab. 'All these people came to him,' said Alex Lau, CEO of InventWood, 'He's like, OK, this is amazing, but I'm a university professor. I don't know quite what to do about it.' Rather than give up, Hu spent the next few years refining the technology, reducing the time it took to make the material from more than a week to a few hours. Soon, it was ready to commercialize, and he licensed the technology to InventWood. Now, the startup's first batches of Superwood will be produced starting this summer. 'Right now, coming out of the this first-of-a-kind commercial plant — so it's a smaller plant — we're focused on skin applications,' Lau said. 'Eventually we want to get to the bones of the building. Ninety percent of the carbon impact from buildings is concrete and steel in the construction of the building.' To build the factory, InventWood has raised $15 million in the first close of a Series A round. The round was led by the Grantham Foundation with participation from Baruch Future Ventures, Builders VC, and Muus Climate Partners, the company exclusively told TechCrunch. Techcrunch event Exhibit at TechCrunch Sessions: AI Secure your spot at TC Sessions: AI and show 1,200+ decision-makers what you've built — without the big spend. Available through May 9 or while tables last. Exhibit at TechCrunch Sessions: AI Secure your spot at TC Sessions: AI and show 1,200+ decision-makers what you've built — without the big spend. Available through May 9 or while tables last. Berkeley, CA | BOOK NOW InventWood's Superwood product starts with regular timber, which is mostly composed of two compounds, cellulose and lignin. The goal is to strengthen the cellulose already present in the wood. 'The cellulose nanocrystal is actually stronger than a carbon fiber,' Lau said. The company treats it with 'food industry' chemicals to modify the lignin in the wood, he said, and then compresses the result to increase the hydrogen bonds between cellulose molecules. 'We might densify the material by 4x and you might think, 'Oh, it'll be four times strong, because it has four times the fiber.' But it's actually more like 10-times stronger because of all these extra bonds that get created,' Lau said. The result is a material that has 50% more tensile strength than steel with a strength-to-weight ratio that's ten-times better, the company said. It's also Class A fire rated, or highly resistant to flame, and resistant to rot and pests. With some polymer impregnated, it can be stabilized for outdoor use like siding, decking, or roofing. InventWood's first products will be facade materials for commercial and high-end residential buildings, Lau said. Compressing the material also concentrates the colors. 'You end up with something that looks like these richer, tropical hardwoods,' he added. Ultimately, InventWood is planning to use wood chips to create structural beams of any dimension that won't need finishing. 'Imagine your I-beams look like this,' Lau said, holding up a sample of Superwood. 'They're beautiful, like walnut, ipe. These are the natural colors. We haven't stained any of this.'
