Why Is DuPont de Nemours (DD) Down 6.2% Since Last Earnings Report?
A month has gone by since the last earnings report for DuPont de Nemours (DD). Shares have lost about 6.2% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
DuPont's Earnings and Revenues Surpass Estimates in Q4
DuPont logged earnings (on a reported basis) from continuing operations of 20 cents per share for fourth-quarter 2022, down from 29 cents per share in the year-ago quarter.
Barring one-time items, earnings came in at 89 cents per share for the reported quarter, topping the Zacks Consensus Estimate of 79 cents.
DuPont raked in net sales of $3,104 million, down 4% from the year-ago quarter. It also surpassed the Zacks Consensus Estimate of $3,083.2. The company saw a 5% rise in organic sales in the quarter, supported by 7% higher pricing that offset 2% lower volumes. The company was challenged by weak conditions in electronics and construction end-markets in the reported quarter. It benefited from disciplined pricing actions to offset inflation.
Sustained strength in water solutions, growth in the automotive adhesives portfolio and gains in certain industrial end-markets were more than offset by weakness in smartphones and personal computing, the slowdown in semiconductor and construction and lower volumes from protective garments.
Segment Highlights
The company’s Electronics & Industrial segment recorded net sales of $1,343 million in the reported quarter, down 8% on a year-over-year comparison basis. Organic sales fell 2% as higher prices were more than offset by reduced volumes. Semiconductor Technologies organic sales rose on higher pricing. Industrial Solutions also registered higher sales while organic sales declined in Interconnect Solutions on lower volumes.
Net sales in the Water & Protection unit were $1,497 million, up 6% year over year. Organic sales rose 12% on pricing gains.
FY22 Results
Earnings from continuing operations for full-year 2022 were $2.02 per share compared with $2.16 per share a year ago. Net sales went up around 4% year over year to $13 billion.
Financials
DuPont had cash and cash equivalents of $3,662 million at the end of 2022, up around 86% year over year. Long-term debt was $7,774 million, down around 27% year over year.
The company also generated operating cash flow of $126 million during the quarter and $588 million in 2022.
Outlook
The company sees net sales for 2023 to be $12,300-$12,900 million. Adjusted earnings per share for 2023 is forecast to be $3.50-$4.00.
For first-quarter 2023, the company sees net sales of roughly $2,900 million. Adjusted earnings per share for the quarter is projected at roughly 80 cents.
DuPont also envisions sustained strength in water and automotive adhesives and stable demand across industrial end-markets including aerospace and healthcare products in 2023. The company, however, sees lower volumes during first-half 2023 in consumer electronics and semiconductors due to reduced consumer spending, inventory destocking and COVID-related impacts in China. It also expects weakness in construction end-markets in Water & Protection during 2023. DuPont projects organic sales to decline in the mid single-digits year over year in the first quarter due to continued weakness in these consumer-driven markets.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -17.38% due to these changes.
VGM Scores
Currently, DuPont de Nemours has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. Notably, DuPont de Nemours has a Zacks Rank #3 (Hold). We expect an in-line 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, Air Products and Chemicals (APD), a stock from the same industry, has gained 1%. The company reported its results for the quarter ended December 2022 more than a month ago.
Air Products and Chemicals reported revenues of $3.17 billion in the last reported quarter, representing a year-over-year change of +6%. EPS of $2.64 for the same period compares with $2.52 a year ago.
For the current quarter, Air Products and Chemicals is expected to post earnings of $2.63 per share, indicating a change of +10.5% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Air Products and Chemicals. Also, the stock has a VGM Score of C.
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