A month has gone by since the last earnings report for DuPont de Nemours (DD). Shares have lost about 7.9% 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 the most recent earnings report in order to get a better handle on the important drivers.
DuPont Tops Q3 Earnings & Sales Estimates, Cuts FY21 View
DuPont recorded earnings (on a reported basis) from continuing operations of 80 cents per share for third-quarter 2021, up from 11 cents per share in the year-ago quarter.
Barring one-time items, earnings came in at $1.15 per share for the reported quarter, topping the Zacks Consensus Estimate of $1.12.
DuPont raked in net sales of $4,271 million, up 18% from the year-ago quarter. It also beat the Zacks Consensus Estimate of $4,093.3 million. The company saw a 16% rise organic sales in the quarter, supported by 10% higher volumes and 6% pricing gains. It also witnessed double-digit sales growth across its segments in the reported quarter.
The company benefited from strong demand across electronics, automotive, construction and water end-markets and sustained improvement in global industrial end-markets in the quarter. However, it faced challenges from raw material cost inflation as well as global supply chain and logistics issues in the quarter.
The company’s Electronics & Industrial segment recorded net sales of $1.5 billion in the reported quarter, up 21% on a year-over-year comparison basis. Organic sales rose 9% on higher volumes. Volume growth was driven by gains in Industrial Solutions with strength in consumer electronics, healthcare and industrial markets. Continued strength was also witnessed in Semiconductor Technologies. Organic sales declined in Interconnect Solutions.
Net sales in the Water & Protection unit were $1.4 billion, up 12% year over year. Organic sales rose 11% on 9% higher volume and 2% higher prices. Sales were driven by Safety Solutions on continued recovery in industrial end-markets. The company also saw strong demand in Water Solutions technologies.
Net sales for the Mobility & Materials division were $1.3 billion in the reported quarter, up 30% year over year. Organic sales jumped 28% on 16% higher pricing and 12% volume increase. The company saw sustained recovery from the impacts of the pandemic. Sales gains were broad-based in the reported quarter, reflecting significant organic growth across Engineering Polymers, Performance Resins and Advanced Solutions.
DuPont had cash and cash equivalents of $1,670 million at the end of the quarter, down around 58% year over year. Long-term debt was $10,629 million, down roughly 51% year over year.
The company also generated operating cash flow of $842 million and free cash flow of $634 million in the quarter. Moreover, it returned around $657 million to shareholders through share repurchases and dividends during the quarter.
DuPont noted that it will continue to implement strategic price increases in the fourth quarter in the wake of rising raw material costs. The company expects strong demand trends to continue across almost all end-markets in the fourth quarter. However, it is witnessing a deceleration in order patterns due to the global semiconductor shortages, mainly in the automotive market.
The company now sees net sales for the year to be between $16.34 billion and $16.40 billion, down from $16.45 billion and $16.55 billion it expected earlier. It also expects adjusted earnings per share for 2021 in the band of $4.18-$4.22, down from the prior view of $4.24-$4.30.
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 -6.85% due to these changes.
Currently, DuPont de Nemours has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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.
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