Shares in industrial conglomerate 3M (NYSE: MMM) spiked by 6% in early morning trading as the market warmed to the company's fourth-quarter earnings report.

3M's turnaround continues

The earnings report and guidance were solid enough and helped confirm the bullish case for 3M stock . While its end markets remain mixed -- strength in areas like electronics, aerospace, and roofing granules is being offset by weakness in areas like the automotive aftermarket, personal safety, and home and auto care -- 3M's management is undergoing an ongoing transformation intended to improve long-term growth and near- to medium-term margins.

You can think of it in terms of two roughly defined buckets. The first bucket is the restructuring initiated by the former CEO Mike Roman (spinning off the healthcare business, job cuts, changing 3M's global go-to-market approach, reducing management layers, and cutting 5% of less favorable consumer product lines). The second bucket comes from current CEO Bill Brown (driving top-line growth through targeted research and development, improving operational performance, and deploying capital better).

Evidence 3M's turnaround is working

While Brown will outline his initiatives in granular detail on Investor Day on Feb. 26, the evidence is that the Roman restructuring appears to be working. For example, despite organic growth of just 1.2% in 2024, 3M's operating margin expanded from 18.6% in 2023 to 21.4% in 2024, leading to 21% earnings-per-share growth.

Moreover, management's guidance for 2025 calls for 2% to 3% organic sales growth, with implied operating margin guidance of 22.7% to 23.3%, with free-cash-flow conversion at 100%. Trading at 19 times the midpoint of 2025 guidance, 3M continues to look like an excellent value stock for 2025.

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