3M: GAAP Earnings per Share Rose 70% but Adjusted Rose 12%, and Organic Growth Is Either 0.2% or 3.3% - and the Stock Rose 5.78%

3M reported third-quarter 2026 results on Tuesday, October 20, before the open. Sales: $6.6 billion, up 1.0%, and operating margin rose 150 basis points to 23.7%. And the stock closed up 5.78% - one of only two sharp gains in this week.

But this report demands particular care, because almost every number in it appears in two versions that sit far apart.

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What was reported

‼ The two gaps, and both need explaining

The first gap: 70% against 12%.

GAAP earnings per share rose 70%, and adjusted rose 12%. The release itemises the bridge, and this is the explanation:

The item that makes the difference is the Solventum ownership: an increase in its value contributed $0.60 per share in the current quarter, while in the year-ago quarter it subtracted $0.13. That is a revaluation of a financial asset - not a sale, and not industrial activity. The year-ago quarter, for its part, carried a $0.30 loss on business divestitures. So both ends of the comparison are distorted, and 70% is not the number that describes the business. 12% is.

The second gap: 0.2% against 3.3%.

GAAP organic growth is 0.2%; adjusted organic growth is 3.3%. The release says plainly what the difference is: adjusted sales exclude manufactured PFAS products. 3M is exiting that category, and revenue from it is shrinking. So the business that remains is growing 3.3%, and the business on the way out subtracts about three points.

And a third change, smaller but worth noting: the company changed its adjusted reporting basis and now treats amortisation of intangible assets as a special item, in all periods. According to the release, the change adds about 40 basis points to the adjusted operating margin and about $0.04 to adjusted earnings per share, and does not materially affect the year-over-year comparison because all periods were restated.

Guidance, raised

The update incorporates, according to the company, year-to-date performance, the acquisition of Madison Fire & Rescue, and the change in amortisation treatment. So part of the raise in the earnings per share guidance comes from a change in measurement rather than from the business - about $0.04, per the release itself.

What is notable beyond the numbers

Two moves the company announced, and both point the same way:

Amazon. 3M expanded its commercial relationship with Amazon to deploy optical connectivity and other data centre products. As part of it, the company issued Amazon a warrant to purchase up to 3.2 million 3M shares, contingent on achieving $6 billion of cumulative sales of those products over the next seven years, plus other milestones. That is an unusual structure - a customer receiving an option on the supplier's shares - and it gives both sides an incentive to grow the volume.

GSEO. The company is collaborating with Genius Electronic Optical on technology development and manufacturing for its Expanded Beam Optics solutions, and is investing to acquire about 4.7% of the Taiwanese company's shares.

Alongside those: a cooling film for fleet and rail, a joint innovation lab with BOE for displays, a collaboration with PING on golf equipment, and government awards - including PELTOR hearing protection for US military services and Scott breathing systems for the US Navy.

The stock

The report was published before the open on Tuesday, and the earnings call was held at 9:00 a.m. Eastern - before the open. The trading reaction is that same day, October 20.

The stock closed at $171.37, up 5.78% from the prior close of $162.01. It opened at $163.00, rose as high as $172.95 and fell as low as $162.13. Volume: 7.7 million shares, versus 3.7 million the day before - double.

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הזווית שלי

דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה

This report is an exercise in reading which number, and in this week it was the exception: it rose 5.78% while most of those who reported fell.

And I think the market read it correctly, but not because of the 70%.

70% describes nothing. It is built from an increase in the value of the Solventum holding that contributed $0.60 per share - a revaluation, not a sale - and from a comparison base that carried a $0.30 loss on business divestitures. 12% is the number of the business, and it is still double-digit, on sales that rose 1.0%. That means profit grew from efficiency and pricing, not from volume.

And the number I would really look at is 3.3% against 0.2%. The difference is 3M's exit from PFAS, and it is shrinking. A company whose remaining business grows 3.3% while the exiting business subtracts three points describes a transition, not stagnation - but until the exit is complete, the reported line will keep looking worse than the business.

And what drew my eye more than anything: the Amazon warrant. A customer receiving an option on 3.2 million of its supplier's shares, contingent on $6 billion of sales over seven years, is not an ordinary purchase agreement - it is a structure that ties the two sides together. For 3M, a company seen as traditionally industrial, that is a revenue line tethered to data centre construction. If it is realised, it will change its growth mix more than any other line in the report. And if it is not, it costs nothing, because the warrant is contingent on the achievement.

What I will follow: organic growth on a GAAP basis, which is the measure of when the PFAS exit stops subtracting; and optical connectivity sales against the $6 billion milestone.

(To be clear: this is my personal opinion only. Nothing here is a recommendation to take any action, and there is no forecast here of the price of any security.)

Ilan Abramov, the author, or anyone on his behalf may hold some of the securities or funds mentioned in this article.