MMM stock is currently slightly overvalued (price $163 vs fair value $143); do not buy yet, wait for lower price or further proof of restructuring benefits.

3M, the industrial company best known for its sticky notes, has undergone several major restructuring efforts in recent years. Given the increasing trade barriers, the war in Iran, rising oil prices, and supply shortages, the company needed it.

But the company has already begun to see signs of benefiting from these changes.

Revenue growth is accelerating, and margins are expected to expand further. Does this make 3M shares a buying opportunity now in October? I wanted to take a look and answer this question taking into account these recent developments, along with the company's long-term performance, and consider its valuation to determine whether it is an attractive buying opportunity right now.

You mentioned that the company is undergoing a major restructuring effort, and one of the things management is doing is getting rid of commodity-like business activities. This has led to a decrease in its revenues from 35 billion to about 25 billion, but organic revenue growth is accelerating.

Therefore, the 3M management team looked at its multiple brands and found many opportunities through which they could sell or get rid of some of those brands and some of those sectors that had turned into commodity-like businesses.

Now, if we exclude the volatility surrounding the litigation and its outcomes, and the profitability fluctuations in 2023 and 2025, you can see those ups on the chart there.

Looking at the long term, 3M's operating profit margin hovered around 20% with a downward trend. A decade ago, the operating profit margin was close to 25%, but over the past twelve months it has been close to 21%.

However, as I mentioned in the introduction, management is making several changes and is optimistic that operating profit margins will grow to 25% in the near term.

One of the methods that contributed to improving margins was raising prices to offset some of the higher oil costs. Management estimated an overall price increase of approximately 1.5% across their product portfolio.

They also reduced the number of manufacturing facilities from about 110 to about 100. They also use artificial intelligence to improve public spending. Departments such as information technology, human resources, finance and accounting are experiencing improved efficiency as a result of the use of artificial intelligence.

Collectively, the management team expects all these factors to lead to improved margins in the future.

Based on the forward price-to-earnings ratio, 3M shares are trading at 16.6, which is near the upper end of what the company has traded at according to this valuation metric over the past few years.

This indicates investor optimism regarding these restructuring efforts by 3M.

As I mentioned, we are already beginning to see the benefits of these restructuring processes, and investors are becoming more optimistic. Revenue growth is accelerating, and margins are improving.

Investors have welcomed the divestment from underperforming assets. All of this works to boost investor confidence in 3M.

In conclusion, this calculation resulted in a fair value estimate of $143 per share for 3M. The current market price is $163. Therefore, the stock appears to be slightly overvalued using the discounted cash flow estimate, and also slightly overvalued using the forward price-to-earnings ratio.

Now, if you were to argue with me and say, "No, the company's value seems fair." I wouldn't object to that because it's very close to reality. However, if you want to answer the question I posed in the title: "Does 3M stock look like a buying opportunity at these market prices?" I would say no, not yet.

I will wait for a slight further decline in the share price, or I will wait for more evidence of improved restructuring processes before I rush to buy 3M stock now.