DuPont de Nemours (DD) Up 5.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for DuPont de Nemours (DD). Shares have added about 5.2% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

DuPont's Earnings and Revenues Surpass Estimates in Q1

DuPont registered a profit from continuing operations of $183 million or 41 cents per share in first-quarter 2024. In the year-ago quarter, the company recorded a profit of $273 million or 58 cents per share.

Barring one-time items, earnings came in at 79 cents per share in the reported quarter, topping the Zacks Consensus Estimate of 65 cents.

DuPont's net sales reached roughly $2.93 billion, down 3% year over year. This result exceeded the Zacks Consensus Estimate of $2.82 billion. The 6% drop in organic sales was caused by a 5% decline in volume and a 1% drop in price. Additionally, there was a 1% headwind due to currency fluctuations, partially offset by a favorable portfolio impact of 4%.

The reduction in volume was primarily caused by ongoing inventory destocking in industrial-based businesses, such as water technologies, particularly in China and medical packaging in the Safety Solutions business. The downside was somewhat mitigated by robust growth in electronic markets.

Segment Highlights

The company’s Electronics & Industrial segment recorded net sales of $1.37 billion in the reported quarter, up 5% on a year-over-year comparison basis. It was above our estimate of $1.27 billion. Organic sales fell 2% on reduced volumes and prices.

Semiconductor Technologies saw a 10% increase in organic sales, driven by the beginning of a recovery in semiconductor demand, normalization of customer inventory levels and the growing demand for OLED materials. Interconnect Solutions experienced a slight rise in organic sales, with mid-single-digit volume gains nearly offset by the effect of lower pass-through metals prices. In contrast, Industrial Solutions recorded a nearly 20% decline in organic sales, mainly due to continued channel inventory destocking for Kalrez parts and in the biopharma markets.

The Water & Protection unit recorded net sales of $1.29 billion, marking an 11% decline from the previous year. This drop was primarily caused by a 10% fall in volume and a 1% adverse impact from currency fluctuations. Despite the year-over-year decline, this figure exceeded our estimate of $1.27 billion.

Safety Solutions experienced a decline in organic sales in the low teens, primarily due to volume declines resulting from ongoing channel inventory destocking, with the most significant impact being generated by reduced demand for medical packaging in healthcare markets. Water Solutions saw an organic sales drop in the mid-teens, driven by lower volumes due to distributor inventory destocking and weaker industrial demand in China. Shelter Solutions remained flat on an organic-sales basis.

Financials

DuPont had cash and cash equivalents of $1.93 billion at the end of the quarter, down around 60% year over year. Long-term debt was $7.78 billion, down about 0.4% year over year.

The company generated operating cash flow from continuing operations of $493 million during the first quarter.

Outlook

DuPont revised its financial outlook for the year, increasing its projections for net sales, operating EBITDA and adjusted EPS. The company anticipates full-year 2024 net sales to be approximately $12.25 billion, operating EBITDA to be about $2.975 billion and adjusted EPS to be around $3.60 per share, based on the mid-point of the updated guidance.

For the second quarter of 2024, DuPont expects a sequential improvement in sales and earnings, attributed to favorable seasonal factors, continued recovery in the electronics sector and a decline in channel inventory destocking across industrial-based end-markets such as water and medical packaging.

Looking ahead to the second half of 2024, the company expects year-over-year sales and earnings growth, driven by ongoing recovery in the electronics market and a return to volume growth in the Water & Protection segment.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 7.74% due to these changes.

VGM Scores

Currently, DuPont de Nemours has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise DuPont de Nemours has a Zacks Rank #1 (Strong Buy). We expect an above average 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, Eastman Chemical (EMN), a stock from the same industry, has gained 5.1%. The company reported its results for the quarter ended March 2024 more than a month ago.

Eastman Chemical reported revenues of $2.31 billion in the last reported quarter, representing a year-over-year change of -4.2%. EPS of $1.61 for the same period compares with $1.63 a year ago.

For the current quarter, Eastman Chemical is expected to post earnings of $2.01 per share, indicating a change of +1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Eastman Chemical. Also, the stock has a VGM Score of C.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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