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Why Is DuPont de Nemours (DD) Up 4% Since Last Earnings Report?

It has been about a month since the last earnings report for DuPont de Nemours (DD). Shares have added about 4% 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 drivers.

DuPont's Earnings and Revenues Surpass Estimates in Q3

DuPont logged earnings (on a reported basis) from continuing operations of 69 cents per share for third-quarter 2022, up from 48 cents per share in the year-ago quarter.

Barring one-time items, earnings came in at 82 cents per share for the reported quarter, beating the Zacks Consensus Estimate of 81 cents.
 
DuPont raked in net sales of $3,317 million, up 4% from the year-ago quarter. It also surpassed the Zacks Consensus Estimate by 1.53%. The company saw an 11% rise in organic sales in the quarter, supported by 3% higher volumes and 8% pricing gains. It benefited from strong underlying demand in its major end-markets during the quarter, especially semiconductor, water and general industrial.

Pricing actions and operational execution helped the company offset the cost inflation in the quarter. Volume rose on strong demand in semiconductor, water and industrial end-markets, partly masked by reduced volumes from protective garments within Safety Solutions and weakness in smartphones and personal computing within Interconnect Solutions.

Segment Highlights

The company’s Electronics & Industrial segment recorded net sales of $1,511 million in the reported quarter, up 3% on a year-over-year comparison basis. Organic sales rose 7% on higher volumes and prices. Semiconductor Technologies organic sales rose on strong demand. Industrial Solutions also registered higher sales while organic sales declined in Interconnect Solutions on lower volumes.

Net sales in the Water & Protection unit were $1,534 million, up 10% year over year. Organic sales rose 15% on 13% pricing gains and 2% higher volumes.

Financials

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

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

DuPont's board, on Nov 7, 2022, approved a new share buyback program authorizing the repurchase of up to $5 billion of common stock.

Outlook

The company sees net sales for 2022 to be roughly $13 billion. Adjusted earnings per share for 2022 is now expected to be roughly $3.30.

DuPont also envisions demand to remain strong in most end-markets, notably water, industrial and auto adhesives in the fourth quarter. However, it sees continued weakness in consumer electronics globally and some slowdown in customer semiconductor fab production rates. It also intends to cut production rates to realign working capital in expectation of a more normal supply chain environment. The company also sees incremental currency headwinds to further impact both top and bottom lines.

DuPont also completed the Mobility & Materials divestment to Celanese on Nov 1, 2022. Moreover, it terminated the earlier announced agreement to buy the outstanding shares of Rogers Corporation on Nov 1 due to lack of receipt of regulatory clearance.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, DuPont de Nemours has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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

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, LyondellBasell (LYB), a stock from the same industry, has gained 2%. The company reported its results for the quarter ended September 2022 more than a month ago.

LyondellBasell reported revenues of $12.25 billion in the last reported quarter, representing a year-over-year change of -3.5%. EPS of $1.96 for the same period compares with $5.25 a year ago.

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

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

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