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DuPont (DD) Warms Up to Q4 Earnings: What's in the Offing? – Zacks.com


DuPont de Nemours, Inc. (DD Free Report) is scheduled to come up with fourth-quarter 2020 results, before the opening bell on Feb 9. Benefits of cost-savings and productivity actions are expected to get reflected on its fourth-quarter results. However, its results are likely to reflect the impacts of weak demand across certain markets and lower nylon prices.

The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missed once. In this timeframe, it delivered an earnings surprise of around 8.3%, on average. It posted an earnings surprise of 14.3% in the last reported quarter.

DuPont’s shares have rallied 47.5% over a year compared with 21.1% rise recorded by the industry it belongs to.

 


 

 

Let’s see how things are shaping up for this announcement.

Zacks Model

Our proven model predicts an earnings beat for DuPont this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for DuPont is +5.09%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: DuPont currently carries a Zacks Rank #3.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for the fourth quarter for DuPont is currently pinned at $5,134 million, suggesting an expected year-over-year decline of 1.3%.

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The Zacks Consensus Estimate for the company’s Electronics & Imaging segment is pegged at $1,003 million, reflecting a 7% rise on a year-over-year comparison basis.

The consensus estimate for the Safety & Construction unit stands at $1,263 million, reflecting a 1% year-over-year increase. The same for the Nutrition & Biosciences division is pegged at $1,473 million, calling for a 1% rise on a year-over-year comparison basis. The Zacks Consensus Estimate for the Transportation & Industrial division stands at $1,120 million, reflecting a 3% year-over-year decline.

Some Factors to Watch For

DuPont is likely to have benefited from its cost and productivity actions in the quarter to be reported. The company expects roughly $280 million of savings for full-year 2020 from its earlier announced incremental cost actions. Additional cost-saving actions are likely to have contributed to its bottom line in the fourth quarter.

The company is also expected to have benefited, in the fourth quarter, from higher demand for products used in personal protection, food & beverage, water filtration, probiotics and electronics markets and a recovery in automotive and residential construction markets.  

However, soft demand across certain markets amid the coronavirus pandemic is likely to have impacted the company’s top line in the fourth quarter. DuPont is seeing weakness across certain markets such as aerospace, commercial construction, industrial and oil & gas. Sustained weakness in these markets is likely to have affected its volumes.

The company is also likely to have faced headwind from weaker nylon prices in the to-be-reported quarter. Nylon prices remain under pressure partly due to the supply-demand imbalance. Pricing pressure is expected to have continued in the Transportation & Industrial division in the fourth quarter due to nylon headwinds.

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Other Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Tronox Holdings plc (TROX Free Report) , scheduled to release earnings on Feb 17, has an Earnings ESP of +57.14% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bunge Limited (BG Free Report) , scheduled to release earnings on Feb 10, has an Earnings ESP of +3.09% and carries a Zacks Rank #1.

Ecolab Inc. (ECL Free Report) , scheduled to release earnings on Feb 16, has an Earnings ESP of +0.08% and carries a Zacks Rank #3.

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