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Why Is DuPont de Nemours (DD) Down 1.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for DuPont de Nemours (DD - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is DuPont de Nemours due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

DuPont Tops Q2 Earnings & Sales Estimates, Raises FY21 View

DuPont recorded earnings (on a reported basis) from continuing operations of $1.04 per share for second-quarter 2021 against a loss of $3.26 per share in the year-ago quarter.

Barring one-time items, earnings came in at $1.06 per share for the reported quarter, topping the Zacks Consensus Estimate of 94 cents.
 
DuPont raked in net sales of $4,135 million, up 26% from the year-ago quarter. It also beat the Zacks Consensus Estimate of $4,003.1 million. The company saw a 23% rise organic sales in the quarter. It also witnessed double-digit sales growth across its segments in the reported quarter.

The company benefited from a recovery in key end-markets such as automotive, construction and industrial and sustained strength in semiconductor and smartphones. However, it faced challenges from higher raw material costs as well as global supply chain and logistics issues in the quarter.

Segment Highlights

The company’s Electronics & Industrial segment recorded net sales of $1.3 billion in the reported quarter, up 19% on a year-over-year comparison basis. Organic sales rose 17% on 17% higher volumes. Sales were driven by gains in Industrial Solutions on broad-based demand, especially in displays, electronics, healthcare and automotive markets. Continued strength was also witnessed in Interconnect Solutions and Semiconductor Technologies.

Net sales in the Water & Protection unit were $1.4 billion, up 14% year over year. Organic sales rose 11% on 11% higher volume. Sales were driven by a more than 30% growth in Shelter Solutions on strong demand in North American residential construction and retail channels for do-it-yourself applications along with continued recovery in commercial construction. The company also saw strong demand in Water Solutions.

Net sales for the Mobility & Materials division were $1.3 billion in the reported quarter, up 61% year over year. Organic sales jumped 55% on 13% higher pricing and 42% volume increase. The company saw sustained recovery in its end-markets, especially automotive, from the impacts of the pandemic. Strong gains in volumes were witnessed across Engineering Polymers, Advanced Solutions and Performance Resins in the reported quarter.

Financials

DuPont had cash and cash equivalents of $3,962 million at the end of the quarter, up around 6% year over year. Long-term debt was $10,627 million, down roughly 32% year over year.

The company also generated operating cash flow of $440 million and free cash flow of $224 million in the quarter. Moreover, it returned around $800 million to shareholders through share repurchases and dividends during the quarter.

Outlook

DuPont raised its guidance for net sales and adjusted earnings per share for 2021 factoring in sustained momentum in its major end-markets. Net sales for the year are now forecast to be between $16.45 billion and $16.55 billion, compared with $15.7 billion and $15.9 billion expected earlier.

The company also expects adjusted earnings per share for 2021 in the band of $4.24-$4.30, up from the prior view of $3.60-$3.75.

For the third quarter of 2021, DuPont sees net sales in the band of $4.18-$4.23 billion. Adjusted earnings are predicted in the range of $1.11-$1.13 per share for the quarter.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 7.8% due to these changes.

VGM Scores

At this time, DuPont de Nemours has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, DuPont de Nemours has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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