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DowDuPont (DWDP) Earnings Top Estimates in Q3, Revenues Lag

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DowDuPont Inc. (DWDP - Free Report) recorded earnings (on a reported basis) from continuing operations of 21 cents per share for third-quarter 2018, compared with 33 cents per share it logged in the comparable quarter a year ago.

Barring one-time items, earnings came in at 74 cents per share for the third quarter that topped the Zacks Consensus Estimate of 71 cents.

DowDuPont raked in net sales of $20,123 million for the reported quarter, up 10% from the year-ago adjusted sales. It fell short of the Zacks Consensus Estimate of $20,305 million.

The company witnessed higher sales volumes and gains in local prices across all segments and geographic regions. It also gained from strong customer demand.

Volumes (as adjusted) rose 5% in the quarter with gains witnessed in all regions and segments. The company saw a 5% rise in adjusted local prices on gains across the board.

Segment Highlights

Materials Science: Revenues from the division went up 13% from the year-ago adjusted sales to $12.4 billion in the quarter on gains in all segments and regions. Volume rose 6% while local price went up 7%.

Specialty Products: Revenues from the division rose 8% to $5.7 billion with gains witnessed in all regions and most segments. Volume rose 3% while local price increased 2%.

Agriculture: Net sales from the division rose 2% to $1.95 billion in the reported quarter on the back of higher volume and increased local price in Latin America. Organic sales went up 11% as volumes rose 8% while pricing improved 3%.
DowDuPont had cash and cash equivalents of roughly $6.9 billion at the end of the quarter. Long-term debt was roughly $27.3 billion.

DowDuPont returned nearly $2 billion to shareholders in the reported quarter through dividends and share repurchases. The company also declared a new share repurchase program worth $3 billion


Moving ahead, DowDuPont is seeing strong global demand for its products, aided by business investment, manufacturing output, job growth and wage increases. It will remain focused on driving top-line growth from above-GDP demand growth for its products and new product launches as well as delivering productivity and cost synergy savings.

DowDuPont achieved cost synergy savings of more than $450 million in the third quarter. The company raised its cost synergy commitment to $3.6 billion from its earlier expectations of $3.3 billion. Moreover, it increased the expected year-over-year savings for 2018 to $1.5 billion from $1.4 billion.

Price Performance

DowDuPont has underperformed the industry it belongs to over the past three months. The company’s shares have lost around 18.8% over this period, compared with roughly 15.2% decline recorded by the industry.


Zacks Rank and Stocks to Consider

DowDuPont currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Methanex Corporation (MEOH - Free Report) , KMG Chemicals, Inc. and CF Industries Holdings, Inc. (CF - Free Report) , each carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have rallied around 30% over a year.

KMG Chemicals has an expected long-term earnings growth rate of 28.5%. The company’s shares are up roughly 37% over a year.

CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained around 25% in a year’s time.

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