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DuPont pre-released disappointing earnings before the opening bell on Wednesday, sending its stock down about 13%. We’re not going to buy that dip. Ahead of next month’s quarterly release, the materials giant said: Fourth-quarter sales are expected to be about $2.9 billion, compared with the Street’s expected $3.0 billion, according to estimates compiled by LSEG. It doesn’t reach the dollar amount. Adjusted earnings per share are expected to be between 85 cents and 87 cents, which is actually just a penny above the midpoint consensus of 85 cents. Fourth quarter operating EBITDA (earnings before interest, taxes, depreciation, and amortization) was approximately $715 million, operating cash flow was approximately $640 million, and adjusted free cash flow was approximately $500 million. It is expected. That compares with estimates of $746 million, $573 million and $447 million, respectively, according to FactSet. So cash looks good, but EBITDA is low. As for the outlook for the current quarter, the real reason the stock has taken such a hard hit and why we’re not in a hurry to recover the stock just yet, management expects first-quarter sales of approximately $2.8 billion. , expects operating EBITDA to be approximately $610 million. , adjusted EPS in the range of 63 to 65 cents. These estimates were a total miss compared to expectations for revenue of $3.04 billion, operating EBITDA of $751 million, and earnings of 88 cents per share. Management is hopeful that the situation will gradually improve going forward, with operating EBITDA expected to increase by approximately 10% compared to the first quarter’s level ($671 million in the above forecast). He said that. That’s still not a huge number compared to the $800 million expected, but it’s in the right direction. We lower our price target for DuPont from $85 to $78 per share given the slow recovery and impact on 2024 earnings. As we mentioned in our Caterpillar trade alert, there’s no reason to rush to buy here. It’s tempting for him to buy back in the mid-60s what he sold in the mid-70s, but for now I’ll reiterate my 2 rating. We are waiting for the stock to stabilize and look forward to hearing more details when management reports on February 6th. Once we receive that report, we fully expect management to announce an aggressive share buyback program to begin the process of restoring market confidence in the stock. . They have the cash flow and balance sheet to do so, and would be wise to hold off ahead of an inflection point in electronics, especially if the destocking headwinds are temporary. DD 1Y Mountain DuPont 1 Year Even if we don’t catch the bottom, not only do we expect him to lower his fiscal year 2024 forecast by at least 24 cents to reflect the analyst’s initial performance, but at this point the risk/reward is not desirable. Although the quarter was weaker than expected, it may be necessary to revise expectations for future quarters downward to reflect a slower-than-expected recovery. However, strong cash generation and management’s focus on improving efficiency demonstrate that it is cash that gets companies through difficult times, and that improving efficiency during such times can lead to greater gains once the rain clouds clear. It continues to interest us because it helps secure upward potential. Regarding the timing of the efficiency efforts, management said in a press release on Wednesday: “The company acted quickly to implement the restructuring measures announced last November and will begin realizing related cost savings in the second half of the first quarter. That’s the plan,” he said. We’ve seen this destocking move hurt other stocks we own, including Nvidia, Danaher, and Advanced Micro Devices before the August exit. If these stocks are telling us anything, it’s that when stocks are already facing headwinds on news of destocking, it’s not the time to sell, if management is doing it right. That means it’s highly likely. As for DuPont, it remains to be seen, so we are waiting patiently. There’s no need to rush to buy. Patience usually pays off. After all, when things are going well, you usually don’t get a good entry point into a strong long-term story. Occurs when an issue occurs that is beyond the administrator’s control. Danaher has made very good moves since late October 2023. NVIDIA has continued to make great strides since its bottom in October 2022, tripling last year, and after hitting a record high in 2024, it is striving towards a record high. AMD is making great profits when it would have been better to sit still. But we don’t really care about AMD. AMD is now back on the bullpen watch list. Because the money from that sale gave him the opportunity to join Broadcom. And it’s the highest it’s ever been. Broadcom also adds a little more diversification given our position in Nvidia. (The Jim Cramer Charitable Trust is Long DD, CAT, NVDA, DHR, AVGO. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, Jim trades Receive trade alerts before making a trade. trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in a charitable trust’s portfolio. If Jim talks about a stock on his CNBC TV, he will wait 72 hours before executing the trade after issuing a trade alert. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
The DuPont sign hangs at DuPont’s world headquarters in Wilmington, Delaware.
Jeff Fusco | Getty Images
dupont The company pre-announced disappointing results before the opening bell on Wednesday, sending the stock down about 13%. We’re not going to buy that dip.
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