DuPont (DD) Gains on Innovation and Spectrum Plastics Buyout
DuPont de Nemours, Inc. DD is expected to benefit from its innovation-driven investment, the Spectrum Plastics Group acquisition and productivity and pricing actions amid headwinds including weak demand in specific businesses.
The company’s shares are up 1.5% over a year against a 14% decline of its industry.
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DuPont, a Zacks Rank #3 (Hold) stock, remains focused on driving growth though innovation and new product development. Its innovation-driven investment is focused on several high-growth areas. DD remains committed to drive returns from its R&D investment.
The company, in August 2023, completed the buyout of leading manufacturer of specialty medical devices and components, Spectrum Plastics Group from AEA Investors for $1.75 billion. The acquired business, with annual sales of around $500 million, has been integrated into the industrial solutions line of business within the Electronics & Industrial segment.
The acquisition strengthens DuPont’s existing position in stable and fast-growing healthcare end markets. It is also in sync with its focus on high-growth, customer-driven innovation for the healthcare market. The addition of Spectrum is expected to boost revenues in the Electronics & Industrial segment.
DuPont is also benefiting from cost synergy savings and productivity improvement actions. Its structural cost actions are contributing to its bottom line. DD also continues to implement strategic price increases in the wake of cost inflation. These actions are likely to support its results in 2023. DuPont is also planning additional restructuring actions and expects savings from these actions to be realized from the first quarter of 2024. It is also managing its portfolio with an aim for value creation. It is divesting non-core assets to focus more on high-growth, high-margin businesses.
However, the company’s water business faces challenges from the slowdown in China. Its water solutions business is expected to see sales moderation in the fourth quarter of 2023 due to softer demand in China resulting from the slowdown in the industrial economy and inventory de-stocking.
Moreover, the weakness in construction end markets is expected to impact the shelter solutions business within the Water & Protection segment in 2023. Also, customer de-stocking in shelter solutions is expected to continue through the fourth quarter.
While the company is seeing a recovery in Interconnect Solutions, the business is expected to continue to be impacted by reduced consumer electronics spending in the near term. Softer smartphone, personal computing and tablet demand is likely to weigh on volumes in this business over the near term.
DuPont de Nemours, Inc. Price and Consensus
DuPont de Nemours, Inc. price-consensus-chart | DuPont de Nemours, Inc. Quote
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include Denison Mines Corp. DNN, Axalta Coating Systems Ltd. AXTA and The Andersons Inc. ANDE.
Denison Mines has a projected earnings growth rate of 100% for the current year. DNN has a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 58% in a year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Axalta Coating Systems’ current-year earnings has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 27% in the past year.
Andersons currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 5.1% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in three of the last four quarters while missed once. It delivered a trailing four-quarter earnings surprise of 32.8%, on average. ANDE shares have rallied roughly 50% in a year.
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