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DuPont (DD) Beats on Q3 Earnings & Sales, Narrows EPS View

Zacks Equity Research

DuPont de Nemours, Inc. DD recorded earnings (on a reported basis) from continuing operations of 49 cents per share for third-quarter 2019, up from earnings of 15 cents per share in the comparable quarter a year ago.

Barring one-time items, earnings were 96 cents per share for the reported quarter, beating the Zacks Consensus Estimate of 95 cents. The company benefited from higher pricing, portfolio actions and cost control amid a challenging macroeconomic environment.

DuPont raked in net sales of $5,426 million, down around 5% from the comparable quarter a year ago. It, however, surpassed the Zacks Consensus Estimate of $5,409.9 million.

Net sales fell 2% on an organic basis as 1% higher pricing was more than offset by 3% lower volumes.  Currency and portfolio headwinds lowered sales by 2% and 1%, respectively.

Segment Highlights

The company’s Electronics & Imaging segment recorded net sales of $934 million in the quarter, down 1% on a year over year comparison basis. Organic sales fell 1%. Higher volumes in interconnect solutions were masked by weaker volumes in advanced printing and semiconductor technologies.

At the Nutrition & Biosciences unit, sales fell 1% to $1.5 billion. Organic sales went up 2% year over year on 1% higher pricing and 1% increased volumes. Higher volumes in food & beverage and pharma solutions businesses coupled with higher pricing in pharma solutions drove growth in organic sales.

Net sales for the Transportation & Industrial division were $1.2 billion in the reported quarter, down 11% year over year. Organic sales fell 10% as 1% higher pricing was more than offset by a 11% decline in volumes due to lower auto builds, soft electronics demand and de-stocking in the automotive channel.

Net sales in the Safety & Construction unit were $1.3 billion, down 3%. Organic sales rose 2% on the back of a 3% price improvement, partly offset by 1% lower volume. Volume improvement in the water solutions business was masked by weakness in the shelter solutions business due to continued softness in construction demand in North America.

Foe the non-core reporting segment, net sales fell 12% to $431 million. Organic sales declined 8%, impacted by lower volumes. Prices rose 2% in the quarter.

Financials
 
DuPont had cash and cash equivalents of $2,107 million at the end of the quarter. Long-term debt was $ 15,610 million.

Outlook

DuPont narrowed its adjusted earnings per share guidance to the range of $3.77-$3.82 for 2019 from its prior view of $3.75-$3.85. The company continues to see organic sales for the year to be modestly down from last year.

Price Performance

DuPont’s shares are down around 8.5% over the past three months, compared with the roughly 1.7% rise recorded by the industry.



 

 

Zacks Rank & Key Picks

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

Better-ranked stocks worth a look in the basic materials space include Agnico Eagle Mines Limited AEM, Kinross Gold Corporation KGC and Franco-Nevada Corporation FNV, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 168.6% for the current year. The company’s shares have rallied 69% in a year’s time.

Kinross has projected earnings growth rate of 210% for the current year. The company’s shares have surged around 85% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 39.3% for the current year. The company’s shares have gained roughly 52% in a year’s time.

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