Stockchase Opinions

Lorne Steinberg DuPont de Nemours Inc. DD-N DON'T BUY Jun 27, 2024

Spun off a few divisions over the years, running out of divisions to spin out. Nothing wrong with the company, there's just better value elsewhere.

$79.980

Stock price when the opinion was issued

chemicals
It's the ideal tool to help you make quicker, more informed decisions for managing and tracking your investments.

You might be interested:

BUY
Yesterday, DD reported a good quarter, but the stock fell yesterday and today. And this after raising its forecast. Industrials as a whole are down. Wall Street doesn't realize there's a new Dupont. It's a long-term valuation creation play. It produces specialty chemicals. The CEO has a great track record unlocking value in companies. He's dumping non-core businesses and adding productive ones, such as as joint venture with a semiconductor company. He sold a nutrition/life sciences business to pay down debt.The CEO has also made deals to add exposure to EVs. DD sales are up YOY, and boasted an earnings beat. Q2-2021 sales are up 26% YOY. The CEO also raised the company forecast. DD bought back shares, too.
COMMENT
Concerned about short term input costs of chemicals, etc. 17 Buys, 3 Holds, 0 Sells.
WAIT
Not the old Dow. Specialty chemicals. Well capitalized, nice dividend, good free cashflow. Cyclical. Risk-on right now. Nothing against the company itself.
BUY ON WEAKNESS
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

DD operates in a cyclical industry and is now trading at 20x times' Forward P/E. In the last few years, DD did actively sell some of its non-core assets, and redeploy the proceeds into significant share repurchases. The balance sheet is okay, with net debt of $3.7B (the debt has gone down substantially due to the proceeds from asset sales mentioned) and net debt/EBITDA is around 1.1x, okay for a cyclical name. Based on consensus estimates, sales are expected to decline by 5% this year and then normalize to around 5% growth going forward. Given the aggressive buyback (the company even cuts the dividends to do more buybacks), DD is quite attractive, but, given the cyclicality of the business, we would size the position conversatively.
Unlock Premium - Try 5i Free

BUY

They just finished a $3.25 billion share buyback and will start a $2 billion one. They've retired 7.6% of their shares so far this year. All told they will reduce shares by 13.5%, the 3rd-biggest buyback on the S&P 500. If you feel interest rates will continue to rise, Dupont is too risk; Dupont has some cyclicality because it's exposed to autos. Overall, he likes Dupont.

RISKY

Reported a disappointing quarter today, but he feels is on the cusp to rise. He trusts the CEO who see green shoots in the electronics end markets that would drive company earnings.

BUY

Can benefit from interest rate cuts, since its business is in homebuilding and related.

BUY ON WEAKNESS
Was downgraded today

They're about to spin off into 3 public companies, masterminded by a great CEO. It's a top company.

HOLD

They announced after today's close that they're accelerating the spin-off of a division and keeping the other. This will bring out more value. Worth holding onto.