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DuPont (DD) Gears Up for Q3 Earnings: What's in the Cards?

Zacks Equity Research

DuPont de Nemours, Inc. DD is scheduled to come up with its third-quarter 2019 results before the opening bell on Oct 31. The company’s results are expected to reflect the impact of weak demand. However, it is likely to have benefited from its cost and productivity actions in the quarter.

DuPont delivered a positive earnings surprise of roughly 12.8% in the second quarter. It benefited from its cost and pricing actions in the quarter.

The company’s shares are down around 7.5% over the past three months, compared with the roughly 2.1% decline recorded by the industry.


Let’s see how things are shaping up for this announcement.

Factors to Watch For

DuPont, in its second-quarter call, said that it expects weak demand in its short-cycle businesses, especially in automotive and semiconductor, to continue in the back half of 2019.

For the third quarter, DuPont expects low-single digit decline in organic net sales on a year over year comparison basis. The company also sees adjusted earnings in the range of 94-99 cents per share for the quarter.

The Zacks Consensus Estimate for revenues for the third quarter for DuPont is currently pegged at $5,410 million.

Soft demand is expected to have impacted the company’s organic sales in the third quarter. DuPont faces headwind from weak demand across some of its businesses. Demand weakness in the semiconductor market is affecting volumes in the company’s Electronics & Imaging business unit. Moreover, softness across automotive and electronics end markets are hurting its volumes and sales in Asia Pacific and EMEA regions. Weakening global economic conditions and trade tariffs are affecting demand.

The company is also likely to have faced some pricing pressure in the third quarter, affecting its sales. DuPont expects pricing weakness through the second half as a result of the supply-demand imbalance.

Moreover, higher manufacturing costs are likely to have weighed on margins in the third quarter. The company sees manufacturing costs to increase across some its segments in the quarter. Notably, DuPont expects increased plant turnaround expenses to push up manufacturing costs in its safety and construction unit.

However, benefits of cost synergy savings and the company’s productivity actions are expected to get reflected on third-quarter results. The company is taking additional cost and productivity improvement actions, which are likely to have contributed to its bottom line in the September quarter.

DuPont de Nemours, Inc. Price and EPS Surprise


DuPont de Nemours, Inc. Price and EPS Surprise
DuPont de Nemours, Inc. Price and EPS Surprise

DuPont de Nemours, Inc. price-eps-surprise | DuPont de Nemours, Inc. Quote

Zacks Model

Our proven model does not conclusively predict that DuPont is likely to beat the Zacks Consensus Estimate this quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for DuPont is -0.70%. The Most Accurate Estimate for the third quarter is currently pegged at 94 cents while the Zacks Consensus Estimate stands at 95 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: DuPont carries a Zacks Rank #3.  

Stocks to Consider

Here are some companies in the basic materials space that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Kinross Gold Corporation KGC, scheduled to release earnings on Nov 6, has an Earnings ESP of +2.50% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries Holdings, Inc. CF scheduled to release earnings on Oct 30, has an Earnings ESP of +6.11% and carries a Zacks Rank #2.

Arconic Inc. ARNC, scheduled to release earnings on Nov 5, has an Earnings ESP of +1.42% and carries a Zacks Rank #3.

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