DD - DuPont de Nemours, Inc.
| Previous Close | 57.39 |
| Open | 57.84 |
| Bid | 58.34 x 900 |
| Ask | 58.36 x 800 |
| Day's Range | 57.57 - 58.37 |
| 52 Week Range | 22.50 - 85.50 |
| Volume | 2,701,576 |
| Avg. Volume | 5,162,064 |
| Market Cap | 43.222B |
| Beta (5Y Monthly) | 1.03 |
| PE Ratio (TTM) | 55.41 |
| EPS (TTM) | 1.05 |
| Earnings Date | Jan 29, 2020 |
| Forward Dividend & Yield | 1.20 (2.09%) |
| Ex-Dividend Date | Nov 26, 2019 |
| 1y Target Est | 78.72 |
- Bloomberg
When Face Masks Are a 3M Big Seller, That’s Telling
(Bloomberg Opinion) -- 3M Co.’s messy quarter does little to inspire faith in the company or the industrial economy at large.The maker of Post-it notes, Scotch tape and wound dressings announced a pair of charges – $134 million for a restructuring plan and $214 million for litigation related to PFAS chemicals – that pulled its fourth-quarter earnings per share below analysts’ estimates. 3M’s particular issues aside, the company sits on the front lines of any economic swings, and there was scant evidence in its results that the great industrial turnaround heralded by President Donald Trump’s trade truce with China has in fact arrived.Sales at 3M fell 2.6% in the fourth quarter after backing out the impact of acquisitions and currency swings, leaving the company with its biggest annual decline on that basis since 2009. With U.S. tariffs still in place on some $360 billion of Chinese goods, political uncertainty tied to the American presidential election and few specifics about alleged purchasing commitments from China — not to mention the potential economic impact of the widening coronavirus crisis — a recovery is apt to be more muted.(1) 3M’s concerns run deeper than just a weak macroeconomic backdrop, though. PFAS — which stands for per- and polyfluoroalkyl substances — are known as the “forever chemicals” because they don’t break down in the environment and accumulate in the body. They have been linked to health problems including cancer and immune system dysfunction, spurring a series of lawsuits against manufacturers including 3M and DuPont de Nemours Inc.’s Chemours Co. spinoff. The charge 3M announced Tuesday reflects updated expectations for customer-related litigation and environmental matters for sites where it historically manufactured the chemical. 3M also disclosed on Tuesday that it had received a grand jury subpoena related to non-compliant discharges from an Alabama facility, and said it had discovered similar issues at an Illinois plant as part of a fourth-quarter review.The charges are a reminder of how much investors still don’t know about 3M’s financial exposure to lawsuits and potential environmental regulation. Gordon Haskett analyst John Inch has estimated 3M’s ultimate liability for PFAS – including remediation, personal injury settlements and monitoring expenses – could be about $27 billion. The company didn’t do itself any favors by waiting until the call to disclose the grand jury probe. That was General Electric Co.’s attitude in 2018 when it casually dropped a mention of a Securities and Exchange Commission investigation into some of its accounting practices an earnings call. That isn’t the company you want to keep when it comes to transparency and accountability.In that light, I treat 3M’s latest restructuring push with a dose of skepticism. The company will dismantle the international operations arm that was tasked with setting priorities for geographic regions and instead give its business groups global control over decisions affecting their strategy and resources. This is meant to be “the next step in its transformation journey” following a shakeup last year, where 3M rethought how its businesses are divided up. The idea was to group its products by customers, rather than market – i.e. sales of automotive products to retail shops would fall under the “consumer” unit rather than be lumped in with automotive revenue from manufacturers or body shops. In theory, this all makes sense and should streamline decision-making processes; 3M says it will help the company save as much as $120 million a year. But it also feels like a bit like reshuffling the deck and a convenient way to throw some corporate-speak at a plan to cut 1,500 jobs that might otherwise have felt less like a “transformation” and more like a reaction to still stubbornly sluggish sales growth.For 2020, 3M warned organic sales may be flat at worst. That’s a weaker forecast than some analysts had been expecting, but RBC analyst Deane Dray warned even this downbeat outlook may not be pessimistic enough. It’s possible sales slump yet again, particularly given 3M’s dependence on China’s economy and the impact from the coronavirus outbreak. 3M had been modeling low-to-mid-single digit growth in China in 2020 off of depressed 2019 numbers, CEO Mike Roman said on the earnings call. While the company had already been expecting a sluggish start to the year in China largely due to still-weak automotive markets, the coronavirus is “changing things as we go,” Roman said. Offsetting the possible negative impact on China’s overall economy is the growing demand for 3M’s face masks and other respiratory-protection products.The coronavirus aside, it’s hard to give 3M the benefit of the doubt after a staggering series of guidance cuts over the course of 2018 and 2019. Even if 3M finally did get its outlook right for a change, its best-case scenario for sales growth is a meager 2% increase. Such sluggish but stabilized revenue growth is likely to describe many manufacturing companies’ performance in 2020, but unlike 3M — which declined in 2019 and fell again on Tuesday’s earnings news — many of them aren’t priced for that kind of environment.(1) Elsewhere on Tuesday, CommerceDepartmentdata showed orders for non-military capital goodsexcluding aircraft—a proxy for business investment —unexpectedly declined 0.9% in December.To contact the author of this story: Brooke Sutherland at bsutherland7@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
DuPont (DD) Warms Up to Q4 Earnings: What's in the Cards?
Soft demand is likely to have impacted DuPont's (DD) volumes and organic sales in the fourth quarter.
- GuruFocus.com
52-Week Company Lows
Details the 52-week lows of Exxon Mobil, General Motors, Simon Property Group, DuPont de Nemours, Williams Companies and Franklin Resources Continue reading...
- Zacks
DuPont (DD) to Showcase Expanded Portfolio in Las Vegas
DuPont (DD) focuses on offering innovative solutions, product design and sustainability to help address today's shortage of skilled labor.
- Market Exclusive
Market Morning: Libra Letdown, Bezos Hacked, Trump Complains, Dirty Water
Libra Stablecoin Gets Door Slammed in Face in Australia, Switzerland Facebook’s (NASDAQ:FB) stablecoin cryptocurrency Libra is bashing its head against a wall of regulators and the wall won't budge. Monetary authorities in Australia and Switzerland are the latest to give Libra a hard time, which is understandable since if and when it goes into circulation, […]The post Market Morning: Libra Letdown, Bezos Hacked, Trump Complains, Dirty Water appeared first on Market Exclusive.
- Business Wire
DuPont Expands Its Performance Building Product Portfolio at 2020 NAHB International Builders’ Show
DuPont, a global science and innovation leader in the construction industry, returns to the NAHB International Builders’ Show (IBS) in Las Vegas running Jan. 21–23, 2020, to showcase its newly expanded portfolio, including DuPont™ Styrofoam™ Brand, Tyvek® Brand products, Great Stuff™ Gaps & Cracks Insulating Foam Sealant and Corian® Solid Surfaces. Customers can now enjoy the benefits of DuPont’s comprehensive warranty for products and surfacing materials for all six sides of a building, top to bottom, inside and out. Through its newly integrated building solutions portfolio, DuPont is expanding performance possibilities for residential, commercial and multi-family structures worldwide.
- Simply Wall St.
DuPont de Nemours (NYSE:DD) Shares Have Generated A Total Return Of -22% In The Last Three Years
As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio...
- Reuters
DuPont to explore divestiture of electronics unit - BBG
Industrial materials maker DuPont is working with advisers to review strategic options, including a sale, for its electronics business, Bloomberg reported https://www.bloomberg.com/news/articles/2020-01-16/dupont-is-said-to-explore-divestiture-of-electronics-unit on Thursday, citing people familiar with the matter. The Electronics and Imaging unit, whose customers include semiconductor and LED makers, was the smallest of Dupont's core business by revenue at the end of the third quarter. The unit's revenue fell in the three quarters of 2019 reported so far, as it struggled with trade uncertainties which exasperated a cyclical weakness in the semiconductor market.
- Zacks
DuPont (DD) Completes Four Clean Water Technology Buyouts
DuPont's (DD) acquisition of four clean water technologies is in sync with its strategy of becoming the leading water technology supplier to better serve changing customer needs globally.
- GuruFocus.com
Stocks That Fell to 3-Year Lows the Week of Jan. 10
DuPont de Nemours, Simon Property Group, Franklin Resources and Textron present buying opportunities Continue reading...
- MarketWatch
House passes bill that could put 3M, other chemicals companies ‘on the hook for billions of dollars in cleanup fees’
The Democratic-led House of Representatives on Friday votes 247-159 in favor of a bill that aims to crack down on “forever chemicals” that have been linked to a range of health problems.
- Reuters
Amid trade row with Japan, South Korea gains Dupont investment to make chip materials
South Korea said on Thursday DuPont will invest $28 million in the country to produce advanced photoresists and other materials by 2021, a move that will help reduce its reliance on Japan for the products used in semiconductor manufacturing. Amid a bilateral row over wartime laborers, Japan in July imposed curbs on exports of three materials including photoresists to South Korea, prompting a scramble among South Korean tech firms to diversify their supply chain. Last month, Japan reversed the curbs on exports of photoresists, although tighter curbs on the two other materials - fluorinated polyimides used in smartphone displays and hydrogen fluoride used as an etching gas when making chips - remain.
- InvestorPlace
3 Big Stock Charts for Tuesday: DuPont, Exelon, and Cabot Oil & Gas
Even with declines on Monday, U.S. stocks are closing out a remarkably strong 2020. The S&P 500 has gained 28.5% so far this year, and the NASDAQ Composite has performed even better. On the whole, American equities, barring a disaster on Tuesday, should post their second-best year since 1997.Source: Shutterstock As noted in the space before, the rally has been both broad and deep. Nearly 80% of stocks with a market capitalization over $300 million are positive in 2019. Almost 20% of those stocks have risen at least 50%. But that still leaves a few names that have been left out of the rally. * 6 Transportation Stocks That Are Going Places Tuesday's big stock charts focus on that group. Two of these stocks have declined so far this year, amid broad pressure on their respective industries. Another has gained less than 1%. But all three of late have shown support, which suggests at least some optimism heading into the New Year.InvestorPlace - Stock Market News, Stock Advice & Trading Tips DuPont de Nemours (DD)Source: Provided by Finviz DuPont de Nemours (NYSE:DD) has been one of the most disappointing stocks of the past few years. In a complicated feat of financial engineering, chemical giants Dow and DuPont first merged into DowDuPont. DowDuPont then spun off the 'new' Dow Inc. (NYSE:DOW) and agricultural play Corteva (NYSE:CTVA) before renaming itself DuPont de Nemours.If that wasn't enough, DuPont this month announced it would combine its nutrition unit with International Flavors & Fragrances (NYSE:IFF). Yet, as the first of Monday's big stock charts shows, none of that movement has created any shareholder value.DowDuPont was a popular pick for sum of the parts upside, but DD stock is down 18% this year (adjusted for the spins). DOW stock has gained 9% since becoming independent, while CTVA is basically flat. The question heading into 2020 is whether the stock finally can stabilize: * Technically, a double bottom around $62 does provide some hope. A Relative Strength Index of 39 isn't quite in oversold territory, but it's not far off. Monday's 2%-plus decline doesn't help the cause, but it's possible that some investors were looking to book tax losses to offset gains elsewhere. Hedge funds may also want the disappointing stock off their books at year-end. There may be buyers willing to step in. * Fundamentally, there is an attractive case here. Earlier this month, I highlighted both DD stock and IFF stock as 2019 losers that could be 2020 winners. The nutrition merger will give DuPont a cash payment of over $7 billion that can be used to pay off debt and buy back stock. And after the sell-off, DuPont stock trades at a reasonable 14.6x forward price-to-earnings multiple. * Click to Enlarge Source: Provided by Finviz But this may be a stock that still has further to fall. The weekly chart still shows a persistent downtrend. End markets remain volatile, and earnings multiples across the chemicals sector usually are below those of the market as a whole. It's possible investors are waiting for the calendar to turn to step into the decline here. But it's also possible that DuPont stock will continue to disappoint in early 2020 as well. Excelon Corporation (EXC)Utility Exelon Corporation (NYSE:EXC) has had a disappointing 2019 as well. Utilities as a sector, as measured by the Utilities Select Sector SPDR Fund (NYSE:XLU), have gained 21%. EXC stock has risen just 0.62%. There are some reasons for the underperformance -- but as the second of our big stock charts shows, investors of late have bet on an improved 2020: * A multiple bottom has been established at $44 and Excelon stock has shown some strength in the last two weeks. Shares have cleared near-term moving averages as well. Utility stocks are usually much less volatile, so a huge breakout is unlikely. But, technically, EXC has a path to the 200-day moving average above $47, and then could challenge the top of a descending triangle pattern. * There are two core worries here. Exelon is facing a federal investigation of its lobbying efforts in Illinois, a probe that may be linked to the sudden resignation of the company's chief executive officer in October. In addition, Exelon's nuclear business is waning: the company shut down its Three Mile Island reactor earlier this year. Both factors have pressured Exelon stock in recent months, and explain in part why shares have lagged the sector. * That said, there's some value here. On an earnings basis, EXC is one of the cheaper large-cap utility stocks in the market. A 3.2% dividend yield should be safe, and remains attractive in an environment where the 10-year Treasury bond yields less than 2%. Federal investigations are hardly welcome, but this is a company with a $44 billion market capitalization. Penalties relating to any untoward actions are likely to be relatively minimal in that context. There's a case that the sell-off has gone too far. Some investors are acting on that case as 2020 approaches. Cabot Oil & Gas (COG)Source: Provided by Finviz Shale exploration plays like Cabot Oil & Gas (NYSE:COG) have had a difficult 2019. Low oil and natural gas prices have hurt profits. The acquisition of Anadarko Petroleum by Occidental Petroleum (NYSE:OXY) was supposed to unleash a wave of merger activity in the sector. But OXY stock wound up hitting a 14-year low in November, potentially scaring off other buyers.Despite the sector weakness, investors have tried to time the bottom in COG stock on a few occasions in the second half of 2019. At the moment, that looks like a potentially dicey bet: * COG stock is fading again after bouncing off support at $16 earlier this month. That fade re-establishes the bearish descending triangle pattern. Near-term moving averages need to provide some help to the stock; otherwise, COG is testing $16 again, and this time around, support may not hold. * On an earnings basis, Cabot Oil & Gas stock does look somewhat cheap, at a little over 10x 2019 EPS estimates. But that multiple hardly is out of line for shale plays. Those same analysts project a roughly 25% decline in profits next year. And a core cyclical worry hangs over COG stock and much of the shale sector. If West Texas Intermediate crude prices are barely holding $60 in a booming economy, what happens when the macro picture inevitably reverses? * It's certainly possible that COG shares improve in 2020, after a 23% decline so far in 2019. That said, caution seems advised, at least in the early going. The shale boom has delivered for consumers. But whether it's explorers like Cabot or even services providers like Halliburton (NYSE:HAL), it hasn't done so yet for investors. It seems too early to believe that 2020 will be notably different.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 6 Transportation Stocks That Are Going Places * 5 Bold Stock Market Predictions for 2020 * 3 Beer Stocks to Own Heading Into New Year 2020 The post 3 Big Stock Charts for Tuesday: DuPont, Exelon, and Cabot Oil & Gas appeared first on InvestorPlace.
- Zacks
Will DuPont (DD) Witness Turbulence in the Next Year Too?
A challenging global economic scenario and soft end-market demand due to the trade war have kept DuPont's (DD) stock under pressure.
- GuruFocus.com
Stocks That Fell to 3-Year Lows in the Week of Dec. 27
Netgear, DuPont de Nemours, Westpac Banking and Macerich present buying opportunities Continue reading...
- MarketWatch
These 10 S&P 500 stocks were lousy in 2019, but they could return 40% or more in 2020
DEEP DIVE This has been an excellent year for U.S. stocks — so good, in fact, that among the S&P 500, only 57 have had negative returns. But it may be profitable to look among the losers for bargains.
- Insider Monkey
Hedge Fund Favorites vs. E I Du Pont De Nemours And Co (DD) In 2019
It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth […]
- Zacks
DuPont Exercises Option to Acquire 100% Ownership of OxyMem
DuPont's (DD) MEMCOR MBR product and MABR technology offer more solutions for customers seeking to reduce footprint and energy requirements for secondary wastewater treatment.
- Simply Wall St.
Why DuPont de Nemours, Inc.’s (NYSE:DD) Return On Capital Employed Is Impressive
Today we are going to look at DuPont de Nemours, Inc. (NYSE:DD) to see whether it might be an attractive investment...
- Barrons.com
A McLaren From Santa
Driving a $210,000 car with 600 horsepower and 465 foot pounds of torque, which can go from 0 to 60 in about three seconds, is fun.
- Bloomberg
Boeing’s Days of Being the Bully Are Over
(Bloomberg Opinion) -- To get Brooke Sutherland’s newsletter delivered directly to your inbox, sign up here.Boeing Co. was an aerospace industry bully for years, leveraging its position as the preeminent U.S. commercial-jet maker to squeeze its suppliers, badger its rivals with trade disputes and reportedly lobby for more oversight over the regulatory review of its own planes. Two fatal crashes and a global grounding of its best-selling 737 Max jet have upended the power dynamic. With its latest decision to halt production, Boeing’s comeuppance is complete.The company announced this week that it would completely shut down production of the Max starting in January. The decision follows a surprisingly indignant and public upbraiding by the Federal Aviation Administration over the company’s unrealistic timeline for the jet’s return and concerns that it was trying to pressure regulators to act more quickly. The Max has been grounded for nine months as regulators review a proposed software fix to a flight-control system and grapple with deeper questions about Boeing’s priorities and flaws in its oversight processes and understanding of pilot reactions. The FAA reportedly may not clear the plane until February at the earliest, and seems increasingly likely to move in tandem with more reticent international regulators rather than lead the charge on approving the Max for flight. Faced with a glut of 400 undeliverable planes, a deepening cash crunch and no clear end in sight to the grounding, the gravity of the damage Boeing has done to its reputation finally seems to be sinking in. It didn’t help matters that Boeing’s unmanned CST-100 Starliner failed to reach the International Space Station Friday. One way to read this production cut is that the company is going into self-preservation mode. While undoubtedly a drastic step, pulling the plug on production should help Boeing conserve cash in the near term as it will stop adding to inventory. But it will raise the longer-term financial cost of the Max crisis, put Boeing’s competitive position further at risk and wreak havoc on many of its suppliers. Citing these concerns, both S&P and Moody’s Investors Service lowered Boeing’s credit rating this week. Boeing in April cut 737 production to 42 planes per month, down from a pre-crash pace of 52. Many suppliers would likely have preferred to see another cut versus a complete stop because it becomes much more difficult to ramp up again if their own network of parts and service providers goes cold. Boeing reportedly believed a full-blown halt over a specific time period would offer more certainty for workers and make them less likely to jump ship in a tight labor market. The production cut it announced this week is instead open-ended. In a way, the lack of a fresh timeline shows the FAA’s effort to humble Boeing is working. But it also makes suppliers – and the broader economy – that much more exposed to the Max crisis at a time when U.S. manufacturing is still soft.Spirit AeroSystems Holdings Inc., which gets more than 50% of its revenue from 737 aircraft components, had been continuing to manufacture airframes at the 52-a-month pace throughout the grounding. Now, it, too, is fully halting production. In the understatement of the year, this suspension “will have an adverse impact on Spirit's business, financial condition, results of operations, and cash flows,” the company said in a statement Friday. Spirit shares fell about 6% this week, while fellow Max suppliers Woodward Inc. and Moog Inc. dropped about 5% and 2%, respectively. The production halt will reduce first quarter U.S. gross domestic product by about 0.5 percentage point, according to estimates from IHS Markit and JPMorgan Chase & Co.General Electric Co.’s CFM engine joint venture with Safran SA is the sole provider for the Max and will likely need to rejigger its own production plans. Perversely, that could actually boost GE’s cash flow because new engine shipments tend to be less profitable than spares or maintenance work. The situation also could allow the company to devote more resources to maintaining engines on stored jets so they can be more quickly brought back into service. Boeing’s commitment to prioritize delivering the 400-odd planes in storage over cranking out new ones should help speed associated payments to GE. Meanwhile, GE is reportedly in discussions with Airbus SE about increasing production of engines for that company's rival to the Max to help maintain its factory capacity. Longer term, however, the company’s elevated exposure to any slippage in the Max backlog or lingering reputational damage is a liability, notes JPMorgan analyst Steve Tusa, who says it’s a possibility the plane doesn’t return at all.I think those suppliers are going to remember all of this the next time they enter contract negotiations with Boeing. Before the two Max plane crashes, Boeing had been pushing for cost cuts in an effort to capture some of its suppliers’ rich profit margins for itself, and had pushed to bring more parts and services work in house through joint ventures and acquisitions. That all likely ends. In the near term, rather than negotiating with Boeing over cost, its suppliers are more likely going to be negotiating for compensation or some sort of arrangement to smooth out the hits to their business from this binary approach to production. In the long term, Boeing’s efforts to rebuild its reputation must entail a reckoning with persistent allegations that it prioritized profit over safety. How does the company do that while encouraging its suppliers to make the kind of cutbacks and outsourcing decisions that landed it in hot water?Apart from the obvious fact that Boeing won’t have cash to spare for acquisitions anytime too soon, the Max crisis should prompt regulators to question the wisdom of allowing the company to continue to consolidate more of the aerospace industry within itself. And suppliers would be justified in being more critical of these attempts to raid their market share. The Max crisis was manufactured largely by Boeing itself, rather than its supply chain. As painful as the production cut will be, the suppliers now at least have more leverage.RETURN OF THE REVERSE MORRIS TRUSTWhoever said taxes were a certainty on par with death was clearly not an M&A banker. There were at least two big Reverse Morris trust deals announced this week, with DuPont de Nemours Inc. agreeing to combine its nutrition and biosciences division with International Flavors & Fragrances Inc., and Ecolab Inc. merging its Nalco Champion oilfield chemicals unit with Apergy Corp. Reverse Morris trusts are a way for larger companies to divest assets without having to pay taxes, as they would in a direct sale. These transactions historically are somewhat rare because the two businesses have to be almost equal in size to meet the requirements, but there’s been a resurgence this decade, particularly among industrial companies, in a natural consequence of the breakup frenzy that’s gripped the sector. The IFF deal values the DuPont nutrition business at $26.2 billion and marks the latest in a long line of breakups for DuPont. The company also is reportedly contemplating a divestiture of its transportation and industrial division. But DuPont doesn’t have much to show for all its slicing and dicing to date, and its conclusion that the solution to its underperformance is yet more breakups makes me ask — yet again — if this craze is going too far. (1)The Apergy-Ecolab deal offers a counterpoint. Apergy was spun off from Dover Corp. last year, and while it’s outperformed the S&P 500 energy sector, it hasn’t been able to avoid the drag from low oil prices and a shift in priorities among exploration companies under pressure to boost shareholder returns. From the outside, Apergy looked like another example of when a spinoff has benefited the parent company much more than the unshackled business. But one argument that activist investors often make for breakups is that businesses benefit from having independent control over their capital spending decisions, which include M&A. The deal with Ecolab likely wouldn’t have happened if Apergy was still part of Dover. Ecolab had initially planned to spin off its energy business. But the combined company, which is expected to have an enterprise value of $7.4 billion, should be stronger than either would have been on their own. Its increased international exposure and well-rounded offerings across oilfield chemicals, equipment and services should help it in a world where energy investors are prioritizing scale and stable free cash flow.(2)FEDEX SPECIAL DELIVERY: CHRISTMAS COALBoeing had the worst 2019 by far among industrial companies, but FedEx Corp. comes in second on my list. The company this week reported yet another cut to a fiscal 2020 forecast that was disappointing to begin with as it continues to struggle with the challenge of ferrying the deluge of e-commerce shipments to consumers’ doorsteps. FedEx continues to blame exogenous factors for its shortcomings: a cyberattack on its TNT Express business that delayed the integration of that acquisition; the U.S.-China trade war; the quirks of the calendar this year. All of those things undoubtedly played a role in FedEx’s earnings slippage, but the real problem seems to be a management team that was unprepared to weather those shocks and has worn out investor patience with unfulfilled promises of a turnaround. Chief Financial Officer Alan Graf says FedEx is nearing a bottom. Practically speaking, that may be true but that leaves a lot of unanswered questions about how FedEx will compete in a shipping world that now includes Amazon.com Inc. as a full-blown competitor. Amazon stopped working with FedEx for its own deliveries earlier this year and this week banned third-party merchants from using the carrier for Prime deliveries because of what it said was a decline in performance. Lest there were any lingering doubts about Amazon’s delivery capabilities, the company also announced this week that its logistics arm now handles about half of deliveries and is on pace to deliver 3.5 billion of its own packages this year.DEALS, ACTIVISTS AND CORPORATE GOVERNANCELeidos Holdings Inc. this week agreed to acquire research and national-security services company Dynetics for $1.65 billion. Dynetics focuses on some of the fastest growing parts of the U.S. Defense Department’s budget, including hypersonics, space, directed energy, artificial intelligence, machine learning and micro-electronics, according to Cowen analyst Cai von Rumohr. So the deal should be a boon to Leidos’s margins and growth. This is the latest example of a defense company betting bigger is better as they jockey for positioning in the DoD budget. The strategic benefits offset a somewhat rich price. Leidos is paying roughly 15 times Dynetics expected 2020 Ebitda, but that multiple drops to 12.6 after accounting for tax benefits. Dynetics is a private, employee-owned company, which Leidos was as well before it went public, so that should help smooth the cultural integration, notes von Rumohr.FirstGroup Plc, having already committed to selling the U.S. Greyhound bus service and other assets, is expanding its breakup plan to include the North American school bus and transit divisions. FirstGroup came under pressure to shake up its business after rejecting two takeover offers from Apollo Global Management that the company said undervalued it, only to see its share price flounder amid disappointing results. The North American assets have a value of at least $5 billion, according to activist investor Coast Capital, which earlier this year sought an overhaul of the board to push through its breakup strategy. Coast Capital’s proxy fight failed, but FirstGroup Chairman Wolfhart Hauser still departed.Clariant AG agreed to sell a plastic-pigments unit to PolyOne Corp. for about $1.5 billion. The chemicals are used to color car parts and packaging, and Baader analyst Markus Mayer hadn’t expected Clariant to get that much for it amid a slump in automotive markets. The deal values the business at about 11 times its adjusted Ebitda in the past year, but expected cost savings of $60 million bring that multiple down to less than 8 times. For PolyOne, the deal continues the company’s shift toward higher-margin specialty chemicals.BONUS READING A Major Shipping Change Is Coming, and So Are Higher Fuel Prices Truckmakers Slash Jobs by the Thousands as Orders Dry Up Billionaire Agnellis Get to Keep Their Sweetener: Chris Bryant Foxconn Plays Tax-Credit Poker With Wisconsin: Tim Culpan Tesla, Saudi Aramco and the Stock Price Bros: Liam DenningA Third of America’s Economy Is Concentrated in Just 31 Counties(1) At least DuPont is getting well-compensated for its nutrition business, much to the chagrin of IFF investors who sent the stock down 8% on the week.(2) The value of diversification through M&A doesn’t fare so well in this example. Ecolab, primarily a provider of chemicals for water and waste-water treatment, built its oilfield services business through the acquisitions of Nalco Holding Co. for $8.1 billion (including debt) in 2011 and Champion Technologies Inc. for $2.2 billion in 2013.To contact the author of this story: Brooke Sutherland at bsutherland7@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- InvestorPlace
10 2019 Losers That Will Be 2020 Winners
2019 has been an excellent year for U.S. stocks to buy. The S&P 500 has risen 27.3% so far this year. It and other broader market indices trade at all-time highs.Unsurprisingly, most stocks have performed well this year. Just 14% of S&P 500 components have declined year-to-date. 27 of the 30 members of the Dow Jones Industrial Average have gained.Not every name has joined in the rally, however. There are some sectors that have lagged. It's been an ugly year for energy stocks, and even worse for cannabis plays. Many of 2019's initial public offerings have disappointed. And other stocks, whether due to external factors or poor execution, have stumbled in 2019.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Vaping Stocks to Get into Ahead of the Crowd Many of 2019's losers likely will continue to struggle in 2020 and beyond. After all, this has been a market where investors have done better to pick the winners, and bet on growth, rather than hope for a recovery. But there are stocks that simply had a bad year -- and look set for a potential recovery as the calendar turns. These 10 stocks all have declined so far in 2019, but have hopes for a brighter 2020. Pfizer (PFE)Source: photobyphm / Shutterstock.com YTD Performance: -10%The case for Pfizer (NYSE:PFE) is relatively simple. Investors can own one of the world's largest pharmaceutical companies at 13.5x estimated 2020 earnings. And in a low interest rate environment where the 10-year Treasury bond yields less than 2%, those investors can realize a 3.9% dividend yield following a recently announced 5.6% hike.The case against PFE stock is almost as simple: that bull case simply hasn't played out all that well in recent years. PFE shares have gained just 23% over the past five years, underperforming the S&P 500's 55% rise.Meanwhile, the pharmaceutical business may not be the safe haven investors once believed it was. Rival Merck (NYSE:MRK) should grow its near-term earnings at a faster clip, and it has been the much better stock in recent years. In a market where the winners keep running and the losers seemingly fall behind, MRK might be the better choice.From here, however, Pfizer stock looks like an attractive pick, particularly for investors looking for income and some downside protection. Pfizer's valuation is about as reasonable as it gets. It has underperformed the market -- but that's not necessarily a surprise given broad market gains. The case for PFE isn't necessarily that it's suddenly going to soar. It's that it should deliver solid returns in a strong market and hold up well if this ten-year-old bull market shows any signs of stress. Walgreens Boots Alliance (WBA)Source: Shutterstock YTD Performance: -14%Pfizer and Walgreens Boots Alliance (NASDAQ:WBA) are two of the Dow Jones' three losers this year (3M (NYSE:MMM) is the other). The bull cases for both stocks are somewhat similar. Investors can own a quality business at an attractive multiple: WBA trades at less than 10x FY21 earnings per share estimates.The risks are similar as well. While Pfizer stock has underperformed, Walgreens stock actually has declined: shares are down nearly 40% from 2015 highs. The declines have resumed in recent session as takeover speculation has cooled.All that said, there's an interesting case here. Other pharmacy names actually have rallied of late, with CVS Health (NYSE:CVS) and even Rite Aid (NYSE:RAD) showing signs of life. Margin compression should ease at some point, assuming reimbursement pressures moderate and generic drug development picks up again. And Walgreens probably has some levers to pull in terms of either rationalizing its store fleet or cutting costs. * The 8 Biggest Investing Surprises of 2019 Buying the dip in WBA admittedly hasn't been a great strategy for most of 2019 and for most of the last four years. The bet here is that 2020 will be different, but investors should keep in mind the possibility that it won't be. DuPont (DD) and International Flavors & Fragrances (IFF)Source: Shutterstock YTD Performance: -16% (DD), -9% (IFF)The split of DowDuPont into DuPont (NYSE:DD), Dow (NYSE:DOW) and Corteva (NYSE:CTVA) hasn't worked out quite as well as investors hoped. Investors who owned DowDuPont at the start of the year are actually down a bit on their investment so far: DOW shares have rallied 9%, but CTVA is down 4% and DD has declined 16%.But DD stock got some good news this week when it agreed to combine its nutrition unit with International Flavors & Fragrances (NYSE:IFF). DuPont will get a cash payment of $7.3 billion, and its shareholders will own a bit over half of the new company.The hope for DD stock is that this deal finally allows the proverbial dust to settle. At 15x forward earnings, DuPont stock is reasonably valued. Support has held repeatedly around current levels. The IFF deal looks like a winner, and in 2020 the perceived benefits of the Dow-DuPont merger/breakup plan should start to play out.IFF has a bull case as well. Shares fell 10.4% on the merger announcement but have crawled back as some investors see value. The combined company will be a giant in its industry. Synergies should help profits going forward. M&A always is risky, so IFF is the more aggressive play. But if the deal works out, shares could have enormous upside. Spirit Airlines (SAVE)Source: Markus Mainka / Shutterstock.com YTD Performance: -29%I expect airline stocks like Spirit Airlines (NYSE:SAVE) to do well in 2020. I chose the U.S. Global Jets ETF (NYSEARCA:JETS) as my pick for the Best ETF of 2020. The economy is solid, competition is rational, and demographics favor the industry, as younger customers prefer experiences like travel to material possessions.In that context, there are bull cases for all the major U.S. airlines. But the pick here is SAVE stock, in part because it was far and away the sector's worst performer in 2019, losing almost 30% of its value YTD.Operating performance admittedly has been a bit soft of late, and needs to improve. But Spirit has room for route expansion, a large order of new planes from Airbus (OTCMKTS:EADSY), and room to lower costs and boost revenue per available seat mile. * 7 Biotech Stocks to Buy and Hold in 2020 The risks here likely are higher relative to established carriers like Southwest Airlines (NYSE:LUV), which seemingly always is a good pick, or Delta Air Lines (NYSE:DAL). But the rewards are higher, too -- and if the sector is set to rally, it makes sense to choose the name with the most potential upside. SAVE looks like that name. Chewy (CHWY)Source: designs by Jack / Shutterstock.com Performance Since First-Day Close: -16%As noted, this year's batch of IPOs hasn't performed particularly well, and Chewy (NYSE:CHWY) is not an exception. Unlike the highest-profile new issues, Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT), CHWY stock does trade above its IPO price of $22. But shares still are down 16% from their first-day closing price, and 22.5% from their opening price of $36.The declines don't seem surprising given a cursory glance at the stock. Chewy will remain unprofitable this year even on an Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) basis. Competition is intense, with giants like Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN) obvious rivals in e-commerce. Even PetSmart, which acquired Chewy for $3.4 billion back in 2017, now is building out its own direct-to-consumer business.But there's an attractive long-term case here, which is why I bought shares this summer. Chewy has an incredibly loyal customer base. Over 70% of its revenue coming from autoship products, and once customers are acquired, their spend increases in a bizarrely consistent fashion.The launch of the pharmacy business should help growth and revenue going forward. Market share remains relatively small, and marketing expense will fade as the customer base grows and the company's mindshare increases. That combination will drive nicely higher margins and free cash flow.Investors already are coming around to the story, as CHWY stock has rallied over the last few weeks. I expect that rally will continue in 2020. Fastly (FSLY)Source: Blackboard / Shutterstock Performance Since First-Day Close: -20%Fastly (NYSE:FSLY) is another of 2019's "busted IPOs." Like CHWY, shares are above the IPO price (in Fastly's case, $16). But shares have fallen 20% from the first-day close. An investor who bought the stock at the open on its first day of trading still would be sitting on a 12% loss.But here, too, there's an intriguing case looking to 2020. Fastly's "edge cloud" platform should benefit from the explosion of streaming services from Disney (NYSE:DIS), AT&T (NYSE:T), and Comcast (NASDAQ:CMCSA). Increased video content of all kinds should increase demand for Fastly's low-latency options, and potentially allow it to take market share from the likes of Akamai Technologies (NASDAQ:AKAM) and Limelight Networks (NASDAQ:LLNW). * 10 Best Stocks for 2020 There are risks. FSLY stock trades at 7x next year's revenue. Profitability is years off. Competition will be intense, and pricing in the industry generally declines over time, a risk to long-term margins. Still, this is an IPO that investors, and analysts, eagerly anticipated. It seems at least possible that optimism will return at some point in 2020. TheRealReal (REAL)Source: Shutterstock Performance Since First-Day Close: -37%It bears repeating: 2019 has been a minefield for IPOs. TheRealReal (NASDAQ:REAL) actually has slipped below its $20 IPO price. The secondhand retailer of luxury goods posted a weak second quarter report in August and shares haven't quite recovered since.But REAL stock has managed to grind higher from that month's lows, and there's a case for more upside ahead. Valuation has come in, even if REAL stock isn't cheap (or yet profitable). The addressable market is enormous: potentially as much as $200 billion, according to the company's prospectus. That suggests currently impressive growth has a long runway ahead. I wrote in July that the stock looked intriguing, if not quite compelling; at a cheaper price, that case does look more attractive.It's certainly possible that valuation will come in further. Competition is an issue, as TheRealReal is battling the likes of Farftech (NYSE:FTCH) and still-private Poshmark. Margins are a worry, given a labor-intensive model relative to the likes of other platform plays like Etsy (NASDAQ:ETSY). Still, as one of many 2019 IPOs selling below its initial price, REAL is worth a look, particularly for growth investors. Aphria (APHA)Source: Shutterstock YTD Performance: -14%To be sure, I'm not quite ready to call the bottom for cannabis stocks like Aphria (NYSE:APHA). The sector has stabilized in recent weeks, but "falling knife" concerns remain. Investors will watch early results from "Cannabis 2.0" products closely, and if there's any disappointment at all, the intense selling in pot stocks could resume.But for investors who believe the bottom is in, I still believe APHA stock is the play, as I wrote this month. The company has reached Adjusted EBITDA profitability. It has a narrower focus than the likes of Canopy Growth (NYSE:CGC), and lacks the balance sheet concerns of Aurora Cannabis (NYSE:ACB) or Hexo (NYSE:HEXO). The company's management issues appear to be in the rearview mirror, and international markets can and should drive growth at some point. * 7 Energy Stocks That Are Still Worth Buying In 2020 Again, it may be too early for APHA stock, and sector weakness has kept the stock flat in recent months despite strong results in the last two quarters. But at the very least, I expect Aphria stock to outperform its cannabis peers -- and potentially be a nice winner if the sector truly is in the process of stabilizing. PlayAGS (AGS)Source: Maridav/Shutterstock, Inc. YTD Performance: -48%From a trading standpoint, slot machine manufacturer PlayAGS (NYSE:AGS) really only had one bad day in 2019. The problem is that it was an absolutely terrible day: AGS stock fell 52% in a single session after second quarter earnings in August. That's one of the worst one-day declines of any stock this year.AGS stock actually has managed to claw back some of the losses, rising 46% from that day's close. And I'd expect that rally to continue in 2020. Even after the rally of the last few months, AGS stock still looks cheap relative to peers like Everi Holdings (NASDAQ:EVRI). The expansion out of tribal-focused Class II games into Class III offerings for commercial customers should drive growth. Free cash flow remains nicely positive, even with a disappointing performance this year, and the balance sheet is manageable.Execution does need to improve, and management's response to the disastrous second quarter result seemed a bit tone-deaf. Still, that sell-off does look like an overreaction, and with some help from the economy and the gaming industry in 2020, AGS should be able to regain more of what was lost in August.As of this writing, Vince Martin is long shares of Chewy. He has no positions in any other securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Vaping Stocks to Get into Ahead of the Crowd * 5 Retail Stocks That Are Winning Big This Holiday Season * Make the Shift Toward Value Stocks With These 5 Picks The post 10 2019 Losers That Will Be 2020 Winners appeared first on InvestorPlace.
