DuPont (DD) Gains on Strong End-Market Demand and Innovation
DuPont de Nemours, Inc. DD is benefiting from strong demand in several end markets, productivity actions and innovation-driven investment amid headwinds from higher raw material and energy costs and slowdown across certain markets.
The company’s shares have gained around 0.9% over the past year, compared with its industry’s decline of 1.6% over the same time frame.
Image Source: Zacks Investment Research
DuPont, a Zacks Rank #3 (Hold) stock, is gaining from healthy underlying demand in a number of end markets, including water and general industrial. The company envisions sustained strength in water and automotive adhesives and stable demand across industrial end-markets including aerospace and healthcare products in 2023.
The company also continues to implement strategic price increases in the wake of raw material and energy cost inflation. These actions are likely to support its results in 2023.
DuPont also remains focused on driving growth though innovation and new product development. Its innovation-driven investment is focused on several high-growth areas. It remains committed to drive returns from its R&D investment. It is also benefiting from cost synergy savings and productivity improvement actions. Its structural cost actions are contributing to its bottom line.
The company 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. DuPont completed the divestment of the majority of its Mobility & Materials unit to Celanese on Nov 1, 2022 as part of its ongoing transformation.
The company received $11 billion in gross cash from the transaction. The move is expected to boost its underlying performance, strengthen its balance sheet, maximize shareholders’ return and provide opportunities to grow business through targeted mergers and acquisitions.
However, DuPont is exposed to headwinds from higher raw material and logistics costs. Supply constraints for major raw materials are expected to continue over the near term. Higher energy costs driven by the Russia-Ukraine conflict are also expected to impact its results.
DuPont also faces challenges from a slowdown in the consumer electronics and semiconductor markets during first-half 2023. The company expects lower volumes during the first half in consumer electronics and semiconductors due to reduced consumer spending, inventory destocking and the impacts of COVID-related restrictions in China.
The company also expects a slowdown in semiconductor fab production rates in the quarter. This may impact its performance in the first quarter. The softness in construction end-markets is also expected to impact the Water & Protection unit in 2023.
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 considering in the basic materials space include Steel Dynamics, Inc. STLD, Olympic Steel, Inc. ZEUS and Linde plc LIN.
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 37.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3%, on average. STLD has gained around 23% in a year.
Olympic Steel currently sports a Zacks Rank #1. The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 60.6% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 26.2%, on average. ZEUS has rallied around 36% in a year.
Linde currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 2.5% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 5.9% on average. LIN’s shares have gained roughly 12% in the past year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
DuPont de Nemours, Inc. (DD) : Free Stock Analysis Report
Olympic Steel, Inc. (ZEUS) : Free Stock Analysis Report
Linde PLC (LIN) : Free Stock Analysis Report
