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DuPont de Nemours (DD) Down 11% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for DuPont de Nemours (DD - Free Report) . Shares have lost about 11% 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 its most recent earnings report in order to get a better handle on the important catalysts.

DuPont's Earnings and Revenues Trounce Estimates in Q4

DuPont recorded earnings (on a reported basis) from continuing operations of 47 cents per share for fourth-quarter 2021, down from 60 cents per share in the year-ago quarter.

Barring one-time items, earnings came in at $1.08 per share for the reported quarter, topping the Zacks Consensus Estimate of $1.01.
 
DuPont raked in net sales of $4,271 million, up 14% from the year-ago quarter. It also beat the Zacks Consensus Estimate of $3,945.8 million. The company saw a 13% rise organic sales in the quarter, supported by 6% higher volumes and 7% pricing gains. It also witnessed double-digit organic growth across all four regions in the reported quarter.

Volume growth was driven by sustained strong global demand in major areas such as semiconductors and water, coupled with continued improvement in industrial end-markets. The price increase mainly reflects actions taken by the company to offset raw material cost inflation.

Segment Highlights

The company’s Electronics & Industrial segment recorded net sales of $1.5 billion in the reported quarter, up 19% on a year-over-year comparison basis. Organic sales rose 9% on higher volumes. Volume growth was driven by gains in Semiconductor Technologies. Industrial Solutions also registered volume growth while organic sales declined in Interconnect Solutions.

Net sales in the Water & Protection unit were $1.4 billion, up 16% year over year. Organic sales rose 17% on 12% higher volume and 5% higher prices. Sales were driven by the growth in Safety Solutions on continued recovery in industrial end-markets. The company also saw strong demand in Water Solutions technologies.

Net sales for the Mobility & Materials division were $1.3 billion in the reported quarter, up 12% year over year. Organic sales rose 13% on 16% higher pricing that more than offset a 3% volume decline. Volume fell due to the weakness in global automotive production resulting from supply-chain constraints, mainly the semiconductor shortage.

FY21 Results

Earnings from continuing operations for full-year 2021 were $3.23 per share compared with a loss of $3.31 per share a year ago. Net sales went up 16% year over year to $16,653 million.

Financials

DuPont had cash and cash equivalents of $2,011 million at the end of 2021, down around 21% year over year. Long-term debt was $10,632 million, down roughly 32% year over year.

The company also generated operating cash flow of $2.3 billion and free cash flow of $1.4 billion in 2021. It returned more than $2.7 billion to shareholders through share repurchases and dividends during the year. DuPont also reduced long-term debt by $5 billion during the year.

DuPont’s board announced a first-quarter dividend of 33 cents per share, representing a 10% increase to regular quarterly dividend. Its board also authorized a new $1 billion share repurchase program, which expires on Mar 31, 2023. The new authorization allows it to buyback shares after the expected completion of the remaining $375 million in repurchases under its current share buyback program in first-quarter 2022.

Outlook

The company sees net sales for 2022 to be between $17.4 billion and $17.8 billion. It also expects adjusted earnings per share (EPS) for 2022 in the band of $4.60-$4.90, reflecting a 10% year-over-year increase at the mid-point of the range.

DuPont expects net sales of between $4.2 billion and $4.3 billion for the first quarter of 2022. Adjusted EPS is forecast in the range of 94 cents to $1.00 for the quarter.

While DuPont expects consumer demand to remain strong, it sees raw material and logistics cost inflation to continue to impact margins. It anticipates operating EBITDA margin to be about flat sequentially in the first quarter with continued improvement through the balance of the year to more normalized levels in the back half.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -13.03% due to these changes.

VGM Scores

Currently, DuPont de Nemours has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. 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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