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Here's Why You Should Hold Onto DuPont (DD) Stock for Now
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DuPont de Nemours, Inc. (DD - Free Report) is expected to gain from its innovation-driven investment, productivity actions and the Spectrum Plastics Group acquisition amid certain challenges including weaker demand in specific businesses.
The company’s shares are up 7.4% over a year against a 7.1% decline of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Productivity, Innovation & Spectrum Buyout to Aid Results
DuPont 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, in August 2023, 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.
Moreover, DuPont is benefiting from cost synergy savings and productivity improvement actions. Benefits of its structural cost actions are expected to be realized in 2024. DD also continues to implement strategic price increases in the wake of cost inflation. These actions are likely to support its results. DuPont is also executing additional restructuring actions and expects savings from these actions to be realized from the first quarter of 2024. It expects annualized cost savings of $150 million from the restructuring measures in 2024.
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.
DuPont remains focused on driving cash flow and returning value to shareholders. It generated operating cash flow from continuing operations of $646 million during the fourth quarter and $2.2 billion for full-year 2023. For full-year 2023, the company generated adjusted free cash flow of $1.6 billion with conversion of 100%. DD, in January 2024, completed the $2 billion accelerated share repurchase transaction launched in September 2023. It has announced the authorization of a new $1 billion share buyback program and a 6% increase to its quarterly dividend. DuPont expects to complete the $1 billion buyback program by the end of 2024.
Weakness in Water & Industrial Businesses a Worry
DuPont’s water business is exposed to headwinds from the slowdown in China. Its water solutions business is seeing sales moderation due to softer demand in China resulting from the slowdown in the industrial economy and distributor inventory de-stocking. The company expects inventory de-stocking and weaker water demand in China to continue in the first quarter. It sees sales in the Water & Protection unit to decline roughly 4% year over year in 2024 factoring in the de-stocking impact in first-half 2024.
The Industrial Solutions business is also being challenged by de-stocking within biopharma applications. DuPont sees additional channel inventory de-stocking within its industrial-based businesses in the first quarter of 2024.
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Denison Mines Corp. (DNN - Free Report) and Innospec Inc. (IOSP - Free Report) .
The Zacks Consensus Estimate for Carpenter Technology’s current fiscal year earnings is pegged at $3.94, indicating a year-over-year surge of 245.6%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 61% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines carries a Zacks Rank #1. DNN beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared roughly 92% in the past year.
The consensus estimate for Innospec’s current-year earnings is pegged at $6.72 per share, indicating a 10.3% year-over-year rise. IOSP, carrying a Zacks Rank #2 (Buy), beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 10.5%. The company’s shares have gained 23% in the past year.
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Here's Why You Should Hold Onto DuPont (DD) Stock for Now
DuPont de Nemours, Inc. (DD - Free Report) is expected to gain from its innovation-driven investment, productivity actions and the Spectrum Plastics Group acquisition amid certain challenges including weaker demand in specific businesses.
The company’s shares are up 7.4% over a year against a 7.1% decline of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Productivity, Innovation & Spectrum Buyout to Aid Results
DuPont 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, in August 2023, 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.
Moreover, DuPont is benefiting from cost synergy savings and productivity improvement actions. Benefits of its structural cost actions are expected to be realized in 2024. DD also continues to implement strategic price increases in the wake of cost inflation. These actions are likely to support its results. DuPont is also executing additional restructuring actions and expects savings from these actions to be realized from the first quarter of 2024. It expects annualized cost savings of $150 million from the restructuring measures in 2024.
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.
DuPont remains focused on driving cash flow and returning value to shareholders. It generated operating cash flow from continuing operations of $646 million during the fourth quarter and $2.2 billion for full-year 2023. For full-year 2023, the company generated adjusted free cash flow of $1.6 billion with conversion of 100%. DD, in January 2024, completed the $2 billion accelerated share repurchase transaction launched in September 2023. It has announced the authorization of a new $1 billion share buyback program and a 6% increase to its quarterly dividend. DuPont expects to complete the $1 billion buyback program by the end of 2024.
Weakness in Water & Industrial Businesses a Worry
DuPont’s water business is exposed to headwinds from the slowdown in China. Its water solutions business is seeing sales moderation due to softer demand in China resulting from the slowdown in the industrial economy and distributor inventory de-stocking. The company expects inventory de-stocking and weaker water demand in China to continue in the first quarter. It sees sales in the Water & Protection unit to decline roughly 4% year over year in 2024 factoring in the de-stocking impact in first-half 2024.
The Industrial Solutions business is also being challenged by de-stocking within biopharma applications. DuPont sees additional channel inventory de-stocking within its industrial-based businesses in the first quarter of 2024.
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) , Denison Mines Corp. (DNN - Free Report) and Innospec Inc. (IOSP - Free Report) .
The Zacks Consensus Estimate for Carpenter Technology’s current fiscal year earnings is pegged at $3.94, indicating a year-over-year surge of 245.6%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 61% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines carries a Zacks Rank #1. DNN beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared roughly 92% in the past year.
The consensus estimate for Innospec’s current-year earnings is pegged at $6.72 per share, indicating a 10.3% year-over-year rise. IOSP, carrying a Zacks Rank #2 (Buy), beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 10.5%. The company’s shares have gained 23% in the past year.