DuPont (DD) Warms Up to Q4 Earnings: What's in the Offing?
DuPont de Nemours, Inc. DD is scheduled to come up with fourth-quarter 2023 results, before the opening bell on Feb 6.
The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters. In this timeframe, it delivered an earnings surprise of 7.1%, on average. It posted an earnings surprise of 9.5% in the last reported quarter.
DuPont’s fourth-quarter results are likely to reflect the impacts of demand softness and inventory de-stocking. It is expected to have benefited from its pricing and productivity actions in the quarter.
DuPont’s shares are down 13.8% over a year compared with an 18.4% decline recorded by the industry it belongs to.
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Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for revenues for the fourth quarter for DuPont is currently pinned at $2,974 million, suggesting an expected year-over-year decline of 6.5%.
DuPont, last month, said that it sees net sales for the fourth quarter to be around $2.9 billion, per preliminary estimates. Adjusted earnings per share are expected in the range of 85-87 cents. The company commented on the challenging business environment, noting lower volumes, channel inventory destocking in industrial businesses and weak demand in China during the fourth quarter.
Some Factors to Watch For
DuPont’s water business is exposed to headwinds from the slowdown in China. Its water solutions business is likely to have seen sales moderation in the fourth quarter due to softer demand in China resulting from the slowdown in the industrial economy and inventory de-stocking.
The softness in construction end markets is also expected to have impacted the shelter solutions business within the Water & Protection segment. Also, customer de-stocking in shelter solutions is likely to have continued in the fourth quarter. The Interconnect Solutions business is also expected to continue to have been impacted by reduced consumer electronics spending in the quarter to be reported.
A sizable goodwill impairment charge is also expected to have weighed on the company’s bottom line in the fourth quarter. DuPont identified a triggering event as of Dec 31, 2023, leading to an impairment analysis of the Protection reporting unit within the Water & Protection segment. The company expects to record a non-cash goodwill impairment charge in the range of $750-$850 million in the fourth quarter.
Nevertheless, DuPont is expected to have witnessed a recovery in the semiconductor technologies business in the December quarter. The company is also likely to have benefited from its cost and productivity actions in the quarter. DD is also expected to have gained from its pricing actions. Moreover, the Spectrum Plastics Group acquisition is likely to have contributed to its performance.
Our estimate for the company’s Electronics & Industrial segment is pinned at $1,339.6 million, indicating a 0.2% year over year decline. The same for the Water & Protection unit is pegged at $1,381 million, suggesting a 7.7% year-over-year decline.
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 an earnings beat for DuPont this season. 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 -0.28%. The Zacks Consensus Estimate for the fourth quarter is currently pegged at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: DuPont currently carries a Zacks Rank #3.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Nutrien Ltd. NTR, scheduled to release earnings on Feb 21, has an Earnings ESP of +8.52% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for NTR’s earnings for the fourth quarter is currently pegged at 72 cents.
Agnico Eagle Mines Limited AEM, slated to release earnings on Feb 15, has an Earnings ESP of +7.46% and carries a Zacks Rank #3 at present.
The consensus mark for AEM’s fourth-quarter earnings is currently pegged at 46 cents.
Kinross Gold Corporation KGC, scheduled to release fourth-quarter earnings on Feb 14, has an Earnings ESP of +12.11%.
The Zacks Consensus Estimate for Kinross' earnings for the fourth quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #3.
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DuPont de Nemours, Inc. (DD) : Free Stock Analysis Report
Kinross Gold Corporation (KGC) : Free Stock Analysis Report
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