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

3M (NYSE:MMM) and Sumitomo (OTCMKTS:SSUMY) 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 institutional ownership, profitability, earnings, valuation, risk, dividends and analyst recommendations.

Analyst Recommendations

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

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

3M presently has a consensus target price of $175.40, indicating a potential upside of 8.27%. Given 3M’s higher possible upside, equities analysts plainly believe 3M is more favorable than Sumitomo.

Institutional & Insider Ownership

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

Profitability

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

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

Risk & Volatility

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

Dividends

3M pays an annual dividend of $2.92 per share and has a dividend yield of 1.8%. Sumitomo pays an annual dividend of $0.68 per share and has a dividend yield of 2.0%. 3M pays out 46.6% of its earnings in the form of a dividend. Sumitomo pays out 20.1% 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 raised its dividend for 1 consecutive years. Sumitomo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
3M	$24.58 billion	3.50	$4.17 billion	$6.26	25.88
Sumitomo	$47.89 billion	0.88	$3.75 billion	$3.39	10.22

3M has higher earnings, but lower revenue 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 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.

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.