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DuPont de Nemours (DD) Down 2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for DuPont de Nemours (DD). Shares have lost about 2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is DuPont de Nemours due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

DuPont's Earnings and Revenues Top Estimates in Q1

DuPont recorded earnings (on a reported basis) from continuing operations of 42 cents per share for first-quarter 2022, down from 64 cents per share in the year-ago quarter.

Barring one-time items, earnings came in at 82 cents per share for the reported quarter, topping the Zacks Consensus Estimate of 67 cents.
 
DuPont raked in net sales of $3,274 million, up 9% from the year-ago quarter. It also beat the Zacks Consensus Estimate of $3,249.9 million. The company saw a 9% rise in organic sales in the quarter, supported by 3% higher volumes and 6% pricing gains. It witnessed sales gain in all regions globally.

Volume growth was driven by sustained strong demand in electronics, industrial technologies, water and construction end-markets, partly masked by continued supply-chain challenges. The price increase mainly reflects actions taken by the company to offset raw material, logistics and energy cost inflation. Supply-chain constraints and cost inflation were exacerbated during the quarter by the Russia-Ukraine conflict.

Segment Highlights

The company’s Electronics & Industrial segment recorded net sales of $1,536 million in the reported quarter, up 18% on a year-over-year comparison basis. Organic sales rose 9% on higher volumes and prices. Semiconductor Technologies organic sales rose on strong demand. Industrial Solutions also registered higher sales while organic sales declined in Interconnect Solutions on lower volumes.

Net sales in the Water & Protection unit were $1,429 million, up 8% year over year. Organic sales rose 10% on pricing actions across the segment. Volumes were flat as the growth in Shelter Solutions and Water Solutions were offset by declines in Safety Solutions.

Financials

DuPont had cash and cash equivalents of $1,672 million at the end of the quarter, down around 62% year over year. Long-term debt was $10,634 million, roughly flat year over year.

The company also generated operating cash flow of $209 million during the quarter.

Outlook

The company sees net sales from continuing operations for 2022 to be between $13.3 billion and $13.7 billion. It also expects adjusted earnings per share (EPS) for 2022 in the band of $3.20-$3.50.

DuPont expects net sales of between $3.2 billion and $3.3 billion for the second quarter of 2022. Adjusted EPS is forecast in the range of 70-80 cents for the quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -7.79% due to these changes.

VGM Scores

At this time, DuPont de Nemours has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise DuPont de Nemours has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

DuPont de Nemours is part of the Zacks Chemical - Diversified industry. Over the past month, Eastman Chemical (EMN), a stock from the same industry, has gained 1.5%. The company reported its results for the quarter ended March 2022 more than a month ago.

Eastman Chemical reported revenues of $2.71 billion in the last reported quarter, representing a year-over-year change of +12.7%. EPS of $2.06 for the same period compares with $2.13 a year ago.

Eastman Chemical is expected to post earnings of $2.67 per share for the current quarter, representing a year-over-year change of +8.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Eastman Chemical. Also, the stock has a VGM Score of B.


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