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DuPont (DD) Gains on Innovation and Spectrum Plastics Buyout
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DuPont de Nemours, Inc. (DD - Free Report) is expected to benefit from its productivity and pricing actions, innovation-driven investment and the Spectrum Plastics Group acquisition amid headwinds including demand softness in certain areas.
The company’s shares are up 39.4% over a year, compared with the 10.8% rise of its industry.
Image Source: Zacks Investment Research
DuPont, a Zacks Rank #3 (Hold) stock, is seeing sustained strength in water, automotive, aerospace and healthcare markets. It remains focused on driving growth though innovation and new product development. Its innovation-driven investment is focused on several high-growth areas. DD remains committed to drive returns from its R&D investment.
The company recently completed the buyout of leading manufacturer of specialty medical devices and components, Spectrum Plastics Group from AEA Investors for $1.75 billion. The acquired business, with annual sales of around $500 million, has been integrated into the industrial solutions line of business within the Electronics & Industrial segment.
The acquisition strengthens DuPont’s existing position in stable and fast-growing healthcare end-markets. It is also in sync with its focus on high-growth, customer-driven innovation for the healthcare market. The addition of Spectrum is expected to boost revenues in the Electronics & Industrial segment in the third quarter.
DuPont is also benefiting from cost synergy savings and productivity improvement actions. Its structural cost actions are contributing to its bottom line. It also continues to implement strategic price increases in the wake of raw material and energy cost inflation. These actions are likely to support its results in 2023. The company is also managing its portfolio with an aim for value creation. It is divesting non-core assets to focus more on high-growth, high-margin businesses.
However, the company’s water business faces challenges from the slowdown in China. Its water solutions business is expected to see sales moderation in the second half of 2023 due to softer demand in China resulting from the slowdown in the industrial economy.
The softness in construction end-markets is also expected to impact the shelter solutions business within the Water & Protection segment in 2023. Also, customer de-stocking in shelter solutions is expected to continue through the third quarter.
While the company is seeing a recovery in Interconnect Solutions, the business is expected to continue to be impacted by reduced consumer electronics spending in the near term. Interconnect Solutions saw a 15% volume decline in the second quarter due to softer smartphone, personal computing and tablet demand.
DuPont’s move to adjust production rates is also expected to impact its top line and margins. The company is taking actions to reduce production rates in electronics to align inventory with demand. Production rate reductions are expected to be a drag on sales and operating EBITDA in the third quarter of 2023.
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Hawkins, Inc. (HWKN - Free Report) and PPG Industries, Inc. (PPG - Free Report) .
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.48, implying year-over-year growth of 205.3%. Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 91% in a year.
Hawkins currently carrying a Zacks Rank #1. It has a projected earnings growth rate of 18.9% for the current year.
Hawkins has a trailing four-quarter earnings surprise of roughly 25.6%, on average. HWKN shares are up around 63% in a year.
PPG Industries currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for PPG's current-year earnings has been revised 3.6% upward over the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 7.3%, on average. PPG shares have gained around 14% in a year.
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DuPont (DD) Gains on Innovation and Spectrum Plastics Buyout
DuPont de Nemours, Inc. (DD - Free Report) is expected to benefit from its productivity and pricing actions, innovation-driven investment and the Spectrum Plastics Group acquisition amid headwinds including demand softness in certain areas.
The company’s shares are up 39.4% over a year, compared with the 10.8% rise of its industry.
Image Source: Zacks Investment Research
DuPont, a Zacks Rank #3 (Hold) stock, is seeing sustained strength in water, automotive, aerospace and healthcare markets. It remains focused on driving growth though innovation and new product development. Its innovation-driven investment is focused on several high-growth areas. DD remains committed to drive returns from its R&D investment.
The company recently completed the buyout of leading manufacturer of specialty medical devices and components, Spectrum Plastics Group from AEA Investors for $1.75 billion. The acquired business, with annual sales of around $500 million, has been integrated into the industrial solutions line of business within the Electronics & Industrial segment.
The acquisition strengthens DuPont’s existing position in stable and fast-growing healthcare end-markets. It is also in sync with its focus on high-growth, customer-driven innovation for the healthcare market. The addition of Spectrum is expected to boost revenues in the Electronics & Industrial segment in the third quarter.
DuPont is also benefiting from cost synergy savings and productivity improvement actions. Its structural cost actions are contributing to its bottom line. It also continues to implement strategic price increases in the wake of raw material and energy cost inflation. These actions are likely to support its results in 2023. The company is also managing its portfolio with an aim for value creation. It is divesting non-core assets to focus more on high-growth, high-margin businesses.
However, the company’s water business faces challenges from the slowdown in China. Its water solutions business is expected to see sales moderation in the second half of 2023 due to softer demand in China resulting from the slowdown in the industrial economy.
The softness in construction end-markets is also expected to impact the shelter solutions business within the Water & Protection segment in 2023. Also, customer de-stocking in shelter solutions is expected to continue through the third quarter.
While the company is seeing a recovery in Interconnect Solutions, the business is expected to continue to be impacted by reduced consumer electronics spending in the near term. Interconnect Solutions saw a 15% volume decline in the second quarter due to softer smartphone, personal computing and tablet demand.
DuPont’s move to adjust production rates is also expected to impact its top line and margins. The company is taking actions to reduce production rates in electronics to align inventory with demand. Production rate reductions are expected to be a drag on sales and operating EBITDA in the third quarter of 2023.
DuPont de Nemours, Inc. Price and Consensus
DuPont de Nemours, Inc. price-consensus-chart | DuPont de Nemours, Inc. Quote
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Hawkins, Inc. (HWKN - Free Report) and PPG Industries, Inc. (PPG - Free Report) .
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.48, implying year-over-year growth of 205.3%. Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 91% in a year.
Hawkins currently carrying a Zacks Rank #1. It has a projected earnings growth rate of 18.9% for the current year.
Hawkins has a trailing four-quarter earnings surprise of roughly 25.6%, on average. HWKN shares are up around 63% in a year.
PPG Industries currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for PPG's current-year earnings has been revised 3.6% upward over the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 7.3%, on average. PPG shares have gained around 14% in a year.