DuPont de Nemours, Inc. DD is scheduled to come up with its second-quarter 2020 results, before the opening bell on Jul 30. The company is likely to have benefited from its cost and productivity actions in the quarter. However, its results are likely to reflect the impacts of weak demand across certain markets and lower nylon prices.
DuPont delivered an earnings surprise of 3.5%, on average, over the trailing four quarters. It posted an earnings surprise of 1.2% in the last reported quarter.
The company’s shares are down 15.1% year to date compared with 10.1% decline recorded by the industry it belongs to.
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for revenues for the second quarter for DuPont is currently pegged at $4,685 million, suggesting an expected year-over-year decline of 14.3%.
The Zacks Consensus Estimate for the company’s Electronics & Imaging segment is pegged at $875 million, reflecting a 1% decline on a sequential comparison basis. The consensus estimate for the Safety & Construction unit stands at $1,207 million, reflecting a 5.4% sequential decline. The same for the Nutrition & Biosciences division is pegged at $1,558 million, calling for a 0.5% rise on a sequential comparison basis.
Factors to Watch For
Demand weakness across certain markets amid the coronavirus pandemic is likely to have impacted the company’s sales in the second quarter. DuPont is seeing softness across certain markets such as automotive, aerospace, industrial and oil & gas. Weakness in the automotive market (reflected by declining global automotive builds) is hurting volumes in the company’s Transportation & Industrial unit. The company is also witnessing weak demand in industrial and aerospace & defense markets due to coronavirus. Oil and gas industry dynamics also remain challenging. Weak demand in these markets is likely to have affected DuPont’s second-quarter volumes.
DuPont is also facing pressure from lower nylon prices, partly due to weak demand. Nylon pricing weakness is expected to have hurt its second-quarter sales.
Moreover, DuPont is idling certain facilities, primarily in the Transportation & Industrial segment, to align its supply with market demand. Costs associated with idling of plants are likely to have weighed on margins in the to-be-reported quarter.
However, benefits of cost synergy savings and the company’s productivity actions are expected to get reflected on June quarter results. The company now sees roughly $180 million of savings in 2020 from its earlier announced incremental cost actions, up from its prior expectation of $90 million. Cost and productivity improvement actions are likely to have contributed to its bottom line in the quarter to be reported.
The company is also expected to have benefited, in the June quarter, from higher demand for products used in personal protection, food & beverage, water filtration, probiotics and electronics markets.
DuPont de Nemours, Inc. Price and EPS Surprise
DuPont de Nemours, Inc. price-eps-surprise | DuPont de Nemours, Inc. Quote
Zacks Model
Our proven model does not conclusively predict an earnings beat for DuPont this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for DuPont is -13.77%. This is because the Most Accurate Estimate is currently pegged at 51 cents while the Zacks Consensus Estimate stands at 59 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: DuPont carries a Zacks Rank #3.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Kinross Gold Corporation KGC, slated to release earnings on Jul 29, has an Earnings ESP of +3.70% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle Mines Limited AEM, slated to release earnings on Jul 29, has an Earnings ESP of +4.17% and carries a Zacks Rank #3.
Barrick Gold Corporation GOLD, scheduled to release earnings on Aug 10, has an Earnings ESP of +0.54% and carries a Zacks Rank #3.
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