Why is DuPont de Nemours (DD) up 4% since its last earnings report?

It’s been about a month since DuPont de Nemours (DD) last reported earnings. Shares are up about 4% in that time, underperforming the S&P 500.

Will the recent positive trend continue into its next earnings release, or is DuPont de Nemours headed for a recession? Before we delve into the latest investor and analyst reaction, let’s take a look at the latest earnings report to better understand the key drivers.

DuPont’s earnings and revenues beat estimates in the third quarter

DuPont reported earnings (based on reports) from continuing operations of 69 cents per share for the third quarter of 2022, compared to 48 cents per share in the year-ago quarter.

Excluding one-time items, earnings for the reported quarter were 82 cents per share, beating the Zacks Consensus Estimate of 81 cents.

DuPont earned net sales of $3,317 million, up 4% from the same quarter last year. It also surpassed the Zacks Consensus Estimate by 1.53%. The company reported an 11% increase in organic sales this quarter, accompanied by a 3% increase in volumes and an 8% increase in prices. The company benefited from strong underlying demand in key end markets this quarter, particularly in the semiconductor, water and general industrial markets.

Pricing actions and operational execution helped the company offset cost inflation during the quarter. Volumes increased on strong demand in the semiconductor, water and industrial markets, partially masked by reduced protective clothing volumes within Safety Solutions and weakness in smartphones and PCs within Interconnect Solutions.

The most important information about the segment

The company’s Electronics and Industrials segment reported net sales of $1,511 million in the quarter, up 3% year-over-year. Organic sales increased 7% due to higher volumes and prices. Semiconductor Technologies’ organic sales increased due to strong demand. Industrial Solutions also reported higher sales, while organic sales at Interconnect Solutions declined on lower volumes.

Net sales in the Water & Protection unit were $1,534 million, up 10% year-over-year. Organic sales increased by 15% with a 13% increase in prices and 2% higher volumes.

Financial

DuPont had cash and cash equivalents of $1,785 million at the end of the quarter, up about 7% year-over-year. Long-term debt was $10,564 million, down approximately 0.6% year over year.

The company also generated operating cash flow of $419 million in the quarter. It returned $415 million to shareholders in the quarter through share repurchases and dividends.

On November 7, 2022, DuPont’s board of directors approved a new stock repurchase program authorizing the repurchase of up to $5 billion of common stock.

Perspectives

The company expects 2022 net sales to be approximately $13 billion. Adjusted earnings per share in 2022 are expected to be approximately $3.30.

DuPont also expects demand to remain strong in most target markets, especially for water, industrial and automotive adhesives in the fourth quarter. However, he sees continued weakness in consumer electronics around the world and some slowing in the pace of customer semiconductor production. It also intends to lower production rates to adjust working capital in anticipation of a more normal supply chain environment. The company also anticipates additional currency headwinds that will impact both the top and bottom lines.

DuPont also completed the sale of Mobility & Materials to Celanese on November 1, 2022. Additionally, on November 1, the company terminated its previously announced agreement to purchase outstanding shares of Rogers Corporation due to failure to obtain regulatory approval.

How have estimates changed since then?

It turns out that the estimates have remained unchanged over the last month.

VGM results

Right now, DuPont de Nemours has a weak Growth Score of F, but its Momentum Score is slightly better at D. Likewise, the stock receives a grade of C on the value side, which puts it in the middle 20% for this investment strategy.

Overall, the stock has an overall VGM Rating of F. If you’re not focused on one strategy, this rating should interest you.

Perspectives

DuPont de Nemours carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

DuPont de Nemours is part of the diversified Zacks Chemical industry. Over the past month, LyondellBasell (LYB) in the same industry has gained 2%. More than a month ago, the company published its results for the quarter ended September 2022.

In the most recent quarter, LyondellBasell reported revenue of $12.25 billion, representing a year-over-year change of -3.5%. EPS of $1.96 in the same period compared to $5.25 a year ago.

LyondellBasell is expected to report earnings of $1.09 per share for the current quarter, representing a year-over-year change of -70%. Over the past 30 days, the Zacks Consensus Estimate has moved -16%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for LyondellBasell. Additionally, the stock has a VGM Score of B.

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