It has been about a month since the last earnings report for DuPont de Nemours (DD). Shares have lost about 4.3% 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 drivers.
DuPont's Earnings and Revenues Trounce Estimates in Q2
DuPont logged earnings (on a reported basis) from continuing operations of 71 cents per share for second-quarter 2022, down from 73 cents per share in the year-ago quarter.
Barring one-time items, earnings came in at 88 cents per share for the reported quarter, topping the Zacks Consensus Estimate of 74 cents.
DuPont raked in net sales of $3,322 million, up 7% from the year-ago quarter. It also surpassed the Zacks Consensus Estimate of $3,254.7 million. The company saw a 9% rise in organic sales in the quarter, supported by 1% higher volumes and 8% pricing gains. Pricing actions fully offset raw materials, logistics and energy cost inflation.
Volume gains were aided by strong demand in semiconductor, general industrial, water and construction end-markets, offset by reduced volumes from protective garments within the Safety Solutions business. The company saw strong underlying demand in its major end-markets during the quarter.
The company’s Electronics & Industrial segment recorded net sales of $1,527 million in the reported quarter, up 16% on a year-over-year comparison basis. Organic sales rose 8% 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 $1,497 million, up 6% year over year. Organic sales rose 9% on 12% pricing gains. Volumes fell 3% in the quarter.
DuPont had cash and cash equivalents of $1,439 million at the end of the quarter, down around 64% year over year. Long-term debt was $10,625 million, roughly flat year over year.
The company also generated operating cash flow of $86 million during the quarter. It returned $665 million to shareholders through share repurchases and dividends during the quarter.
The company sees net sales for 2022 to be between $13 billion and $13.4 billion. It also narrowed its adjusted earnings per share (EPS) guidance for 2022 to the band of $3.27-$3.43 from its earlier view of $3.20-$3.50.
DuPont expects net sales of between $3.17 billion and $3.37 billion for the third quarter of 2022. Adjusted EPS is forecast to be around 81 cents for the quarter.
The company envisions net sales and operating EBITDA for the third quarter to be modestly weaker than the second quarter as higher sequential volumes are expected to be offset by foreign currency headwinds and the absence of the Biomaterials net sales contribution.
DuPont also sees an unfavorable impact in the third quarter on operating EBITDA of roughly $15 million from unplanned downtime at its Spruance site in Virginia. It expects third-quarter net sales to be up 2% at the mid-point of the guidance range on a year-over-year basis, or up high single-digits on an organic basis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -10.62% due to these changes.
Currently, DuPont de Nemours has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
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, Methanex (MEOH), a stock from the same industry, has gained 1.9%. The company reported its results for the quarter ended June 2022 more than a month ago.
Methanex reported revenues of $1.14 billion in the last reported quarter, representing a year-over-year change of +6.5%. EPS of $1.16 for the same period compares with $1.24 a year ago.
For the current quarter, Methanex is expected to post earnings of $1.15 per share, indicating a change of -10.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -12.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Methanex. Also, the stock has a VGM Score of A.
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