Materials giant
DuPont
managed to beat Wall Street’s first-quarter earnings estimates. Still, the stock was trading lower. There is just too much weakness in the company’s electronics and industrial businesses for investors to feel comfortable.
DuPont
(ticker: DD) reported first-quarter adjusted earnings on Tuesday of 84 cents a share from $3 billion in sales. Wall Street was looking for 80 cents and $2.9 billion, respectively.
In the second quarter, DuPont expect to earn 84 cents a share from $3 billion in sales. Wall Street had been forecasting profit of 88 cents on sales of $3.1 billion, respectively.
Second-quarter guidance was a little light. DuPont also reduced its full-year financial guidance. The company now expects to earn between $3.55 and $3.70 a share for the year on sales of between $12.3 billion and $12.5 billion. In February, management expected earnings per share of between $3.50 and $4 and sales of $12.3 billion to $12.9 billion.
Shares were down 6.3% in premarket trading Tuesday at $65 apiece.
S&P 500
and
Dow Jones Industrial Average
futures were both off about 0.2%.
Sales in the company’s electronics and industrial-related businesses dropped 16% year over year, pressuring profit margins. Sales in DuPont’s water-related business grew about 1%.
“We delivered earnings in line with our expectations for the first quarter of 2023 which reflects our team’s continued strong execution despite a lower volume environment in electronics and construction-related end markets,” said CEO Ed Breen in a news release. “Our businesses are well-equipped to leverage leading market positions and accelerate growth when consumer-driven, short-cycle electronics end markets recover.”
Investors would like to know when the recovery in those markets will take place.
Along with earnings, DuPont also announced a deal to acquire Spectrum Plastics, which sells primarily into medical end markets, for about $1.8 billion. That is about 15 times estimated 2023 earnings before interest, taxes, depreciation and amortization. The multiple drops to about 13 times when DuPont includes $20 million in expected cost synergies.
DuPont shares trade for about 11 times estimated 2023 Ebitda.
Coming into Tuesday trading, DuPont shares have risen about 1% this year and have gained about 5% over the past 12 months.
Write to Al Root at [email protected]
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