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Why Is DuPont de Nemours (DD) Up 5% Since Last Earnings Report?
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A month has gone by since the last earnings report for DuPont de Nemours (DD - Free Report) . Shares have added about 5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is DuPont de Nemours due for a pullback? 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 catalysts.
DuPont's Q3 Earnings Surpass Estimates, Revenues Lag
DuPont reported earnings from continuing operations of 62 cents per share for third-quarter 2023, down from 69 cents per share in the year-ago quarter.
Barring one-time items, earnings came in at 92 cents per share for the reported quarter, topping the Zacks Consensus Estimate of 84 cents.
DuPont raked in net sales of around $3.06 billion, down 8% from the year-ago quarter. It lagged the Zacks Consensus Estimate of $3.15 billion. The company saw a 10% decline in organic sales in the quarter, modestly offset by a favorable portfolio impact of 2%.
Segment Highlights
The company’s Electronics & Industrial segment recorded net sales of around $1.37 billion in the reported quarter, down 9% on a year-over-year comparison basis. It was above our estimate of $1.34 billion. Organic sales fell 13% due to a 12% decline in volumes and a 1% fall in prices.
The Semiconductor Technologies business reported a high-teen decline in organic sales due to inventory destocking and reduced semiconductor fab utilization caused by weak consumer electronics demand. However, on a reported basis, sales remained flat sequentially. Interconnect Solutions also witnessed an 11% year-over-year decrease in organic sales, driven by reduced consumer electronics volumes, inventory destocking, and lower metals price pass-through, but reported an 8% sequential increase. In the Industrial Solutions business, organic sales were down by a high-single-digit percentage, primarily due to biopharma market inventory destocking and lower demand in electronics-related sectors, partially offset by increased demand for OLED materials.
Net sales in the Water & Protection unit were roughly $1.41 billion, down 8% on a year-over-year comparison basis. The figure was below our estimate of $1.46 billion. Sales fell due to a 9% decline in volume, slightly offset by a 1% increase in price.
Safety Solutions reported a high-single-digit decline in organic sales, primarily due to volume declines resulting from channel inventory destocking. Shelter Solutions also experienced a high-single-digit organic sales decrease, driven by ongoing softness in the construction market, including inventory destocking. Water Solutions saw a mid-single-digit decline in organic sales, mainly due to lower volumes resulting from weaker industrial demand and distributor inventory destocking in China.
Financials
DuPont had cash and cash equivalents of roughly $1.34 billion at the end of the quarter, down around 25% year over year. Long-term debt was around $7.74 billion, down about 26.7% year over year.
The company also generated operating cash flow from continuing operations of $740 million during the quarter.
Guidance
The company now sees net sales for 2023 to be around $12.17 billion. Adjusted earnings per share for 2023 are forecast to be around $3.45. Also, Operating EBITDA for 2023 is expected to be around $2.97 billion.
For the fourth quarter, demand for consumer electronics is anticipated to remain in line with the third quarter, as indicated by consistent order rates from customers. This will likely result in a sequential sales improvement in the Semiconductor Technologies segment. However, compared with the previous guidance, there are additional challenges stemming from channel inventory destocking and decreased industrial water demand in China.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.6% due to these changes.
VGM Scores
Currently, DuPont de Nemours has a subpar Growth Score of D, however its Momentum Score is doing a bit 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 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 downward for the stock, and the magnitude of these revisions 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.
Performance of an Industry Player
DuPont de Nemours is part of the Zacks Chemical - Diversified industry. Over the past month, Olin (OLN - Free Report) , a stock from the same industry, has gained 7.6%. The company reported its results for the quarter ended September 2023 more than a month ago.
Olin reported revenues of $1.67 billion in the last reported quarter, representing a year-over-year change of -28%. EPS of $0.82 for the same period compares with $2.18 a year ago.
Olin is expected to post earnings of $0.29 per share for the current quarter, representing a year-over-year change of -79.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -23.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Olin. Also, the stock has a VGM Score of B.
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Why Is DuPont de Nemours (DD) Up 5% Since Last Earnings Report?
A month has gone by since the last earnings report for DuPont de Nemours (DD - Free Report) . Shares have added about 5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is DuPont de Nemours due for a pullback? 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 catalysts.
DuPont's Q3 Earnings Surpass Estimates, Revenues Lag
DuPont reported earnings from continuing operations of 62 cents per share for third-quarter 2023, down from 69 cents per share in the year-ago quarter.
Barring one-time items, earnings came in at 92 cents per share for the reported quarter, topping the Zacks Consensus Estimate of 84 cents.
DuPont raked in net sales of around $3.06 billion, down 8% from the year-ago quarter. It lagged the Zacks Consensus Estimate of $3.15 billion. The company saw a 10% decline in organic sales in the quarter, modestly offset by a favorable portfolio impact of 2%.
Segment Highlights
The company’s Electronics & Industrial segment recorded net sales of around $1.37 billion in the reported quarter, down 9% on a year-over-year comparison basis. It was above our estimate of $1.34 billion. Organic sales fell 13% due to a 12% decline in volumes and a 1% fall in prices.
The Semiconductor Technologies business reported a high-teen decline in organic sales due to inventory destocking and reduced semiconductor fab utilization caused by weak consumer electronics demand. However, on a reported basis, sales remained flat sequentially. Interconnect Solutions also witnessed an 11% year-over-year decrease in organic sales, driven by reduced consumer electronics volumes, inventory destocking, and lower metals price pass-through, but reported an 8% sequential increase. In the Industrial Solutions business, organic sales were down by a high-single-digit percentage, primarily due to biopharma market inventory destocking and lower demand in electronics-related sectors, partially offset by increased demand for OLED materials.
Net sales in the Water & Protection unit were roughly $1.41 billion, down 8% on a year-over-year comparison basis. The figure was below our estimate of $1.46 billion. Sales fell due to a 9% decline in volume, slightly offset by a 1% increase in price.
Safety Solutions reported a high-single-digit decline in organic sales, primarily due to volume declines resulting from channel inventory destocking. Shelter Solutions also experienced a high-single-digit organic sales decrease, driven by ongoing softness in the construction market, including inventory destocking. Water Solutions saw a mid-single-digit decline in organic sales, mainly due to lower volumes resulting from weaker industrial demand and distributor inventory destocking in China.
Financials
DuPont had cash and cash equivalents of roughly $1.34 billion at the end of the quarter, down around 25% year over year. Long-term debt was around $7.74 billion, down about 26.7% year over year.
The company also generated operating cash flow from continuing operations of $740 million during the quarter.
Guidance
The company now sees net sales for 2023 to be around $12.17 billion. Adjusted earnings per share for 2023 are forecast to be around $3.45. Also, Operating EBITDA for 2023 is expected to be around $2.97 billion.
For the fourth quarter, demand for consumer electronics is anticipated to remain in line with the third quarter, as indicated by consistent order rates from customers. This will likely result in a sequential sales improvement in the Semiconductor Technologies segment. However, compared with the previous guidance, there are additional challenges stemming from channel inventory destocking and decreased industrial water demand in China.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.6% due to these changes.
VGM Scores
Currently, DuPont de Nemours has a subpar Growth Score of D, however its Momentum Score is doing a bit 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 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 downward for the stock, and the magnitude of these revisions 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.
Performance of an Industry Player
DuPont de Nemours is part of the Zacks Chemical - Diversified industry. Over the past month, Olin (OLN - Free Report) , a stock from the same industry, has gained 7.6%. The company reported its results for the quarter ended September 2023 more than a month ago.
Olin reported revenues of $1.67 billion in the last reported quarter, representing a year-over-year change of -28%. EPS of $0.82 for the same period compares with $2.18 a year ago.
Olin is expected to post earnings of $0.29 per share for the current quarter, representing a year-over-year change of -79.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -23.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Olin. Also, the stock has a VGM Score of B.