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DuPont's (DD) Earnings and Revenues Top Estimates in Q2

Zacks Equity Research
·4 min read

DuPont de Nemours, Inc. DD recorded a loss (on a reported basis) from continuing operations of $3.37 per share for second-quarter 2020, wider than a loss of $1.48 per share in the year-ago quarter.

The bottom line in the reported quarter was hurt by a $2.5 billion non-cash impairment charge in the company’s Transportation & Industrial segment, resulting from the global slowdown in the automotive industry due to the coronavirus pandemic.

Barring one-time items, earnings came in at 70 cents per share for the reported quarter, topping the Zacks Consensus Estimate of 59 cents.

DuPont raked in net sales of $4,828 million, down 12% from the year-ago quarter. It also surpassed the Zacks Consensus Estimate of $4,685 million.

Net sales fell 10% on an organic basis as growth in Electronics & Imaging and Nutrition & Biosciences units was more than offset by declines in the other segments.

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

 

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

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

 

Segment Highlights

The company’s Electronics & Imaging segment recorded net sales of $905 million in the reported quarter, up 5% on a year-over-year comparison basis. Organic sales rose 7% on 7% higher volumes. Strong volume gains in Semiconductor Technologies more than offset softer demand across Interconnect Solutions and Image Solutions.

At the Nutrition & Biosciences unit, sales were down 1% year over year to $1.5 billion. Organic sales rose 1% year over year on 1% higher volumes. The company saw strength across food & beverage and health & wellness end markets.

Net sales for the Transportation & Industrial division were $832 million in the reported quarter, down 34% year over year. Organic sales fell 33% on 5% lower pricing and 28% volume decline due to weakness in the automotive market.

Net sales in the Safety & Construction unit were $1.2 billion, down 7% year over year. Organic sales fell 8% as 2% price improvement was offset by 10% lower volume.  The company saw strong demand for Tyvek protective garments.

In the non-core reporting segment, net sales fell 30% year over year to $308 million. Organic sales declined 20%, impacted by 22% lower volumes. Prices rose 2% in the quarter.

Financials

DuPont had cash and cash equivalents of $3,737 million at the end of the quarter. Long-term debt was $15,608 million.

The company also generated operating cash flow of $802 million and free cash flow of $564 million in the reported quarter.

Outlook

DuPont sees sales to be modestly up in the third quarter on a sequential comparison basis. A recovery in automotive and residential construction is expected to be mostly offset by seasonal patterns in Nutrition & Biosciences and the effects of supply constraints in Tyvek. The company also expects aerospace, industrial, oil & gas commercial construction markets to remain challenged. DuPont expects adjusted earnings per share for the third quarter in the band of 71-73 cents.

Price Performance

DuPont’s shares are down around 13.6% year to date compared with a 10.3% decline recorded by the industry.

 

 

Zacks Rank & Key Picks

DuPont currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Royal Gold, Inc. RGLD, Equinox Gold Corp. EQX and Kinross Gold Corporation KGC.

Royal Gold has a projected earnings growth rate of 62.1% for the current year. The company’s shares have gained around 17% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Equinox Gold has a projected earnings growth rate of 255.2% for the current year. The company’s shares have rallied roughly 101% in a year. It currently carries a Zacks Rank #2 (Buy).

Kinross Gold has an expected earnings growth rate of 85.3% for the current year. The company’s shares have shot up around 107% in the past year. It presently carries a Zacks Rank #2.

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