DuPont (DD) After Two Centuries Investors should be Cautious

Dupont Overview:

DuPont (NYSE: DD) is a global innovation leader with technology-based materials and solutions which helps transform industries and our everyday life. DuPont de Nemours, Inc., popularly known as DuPont is an amalgamation of Dow Chemical and E.I. Du Pont de Nemours and Company in 2017. Later the merged entity, DowDupont was split into three publicly traded companies with focuses on agriculture (Corteva), Materials Science (Dow Inc.), and Specialty Products (DuPont). In Jan 2021, DD has been recognized as the “Best Place to Work” for LGBTQ+ Equality by the Human Rights Campaign (HRC) Foundation.

DuPont helps the customers to advance their best ideas and deliver essential innovations in key areas including electronics, construction, transportation, health, water, and wellness.

This more than two century old company head quartered in Delaware has seen some of the worst economic downturns. DuPont has a market cap of 39.83B USD and has been consistently paying dividends for last 50 years. It has posted a loss for the first time in last 5 years, but the EPS has been going down from 2018 when it was 4.95 and later had an EPS of 0.67 in 2019. Considering an average EPS of 2, the company is still having a P/E of approximately 35 which is on the higher side for the industry that the company operates in.

Though the revenue of 20.4B looks promising but the concern is the profit margin which stands at -14.47%. Cash reserves of 2.54B in its balance sheet offer a positive indicator that would point to the company’s ability to navigate through the current uncertain macro-economic environment.

Other interesting Metrics

The current ratio of 2.32 looks decent and as the economy comes out of this pandemic it would be worth while to observe whether DuPont can make a positive bottom line. As per the analyst estimates the EPS is predicted to be around 3.41 in 2022 and at the current price point of 76 (as of me writing) the forward EPS seem to be at 21.7.

The long-term investor can stay invested as the company has a long history of paying consistent dividends but for short term and medium-term investors it would be prudent to watch the quarterly results for next few quarters and take a decision accordingly.   

Jessica London
Jessica London

Jessica London comes to with 7+ years of technical writing experience about financial markets. From stocks and bonds to business acquisitions, Forex, and growth strategies, Jessica is well positioned to add a new insight and value to A real estate investor first, she however hedges her portfolio with REITS, and stock option derivatives and looks forward to sharing her experiences with our readers.

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