Buy or Sell DuPont de Nemours Stock?

DuPont de Nemours (DD) stock has fallen 58% during the past day, and is currently trading at $34.69. We believe there are several things to fear in DD stock given its overall Weak operating performance and financial condition. This is aligned with the stock’s Low valuation because of which we think it is Fairly Priced.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $15 Bil in market cap, DuPont de Nemours provides technology-based materials and solutions globally, including advanced printing materials, engineering resins, silicone encapsulants, pastes, filaments, and advanced films for various industries.

[1] Valuation Looks Low

This table highlights how DD is valued vs broader market. For more details see: DD Valuation Ratios

[2] Growth Is Inconsistent

• DuPont de Nemours has seen its top line shrink at an average rate of -1.0% over the last 3 years
• Its revenues have grown 4.6% from $12 Bil to $13 Bil in the last 12 months
• Also, its quarterly revenues grew 2.7% to $3.3 Bil in the most recent quarter from $3.2 Bil a year ago.

This table highlights how DD is growing vs broader market. For more details see: DD Revenue Comparison

[3] Profitability Appears Weak

• DD last 12 month operating income was $2.0 Bil representing operating margin of 16.1%
• With cash flow margin of 16.4%, it generated nearly $2.1 Bil in operating cash flow over this period
• For the same period, DD generated nearly $-194 Mil in net income, suggesting net margin of about -1.5%

This table highlights how DD profitability vs broader market. For more details see: DD Operating Income Comparison

[4] Financial Stability Looks Strong

• DD Debt was $7.2 Bil at the end of the most recent quarter, while its current Market Cap is $15 Bil. This implies Debt-to-Equity Ratio of 49.9%
• DD Cash (including cash equivalents) makes up $1.8 Bil of $37 Bil in total Assets. This yields a Cash-to-Assets Ratio of 5.0%

[5] Downturn Resilience Is Very Weak

DD has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• DD stock fell 42.0% from a high of $86.36 on 12 January 2021 to $50.05 on 26 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 24 September 2024
• Since then, the stock increased to a high of $89.54 on 29 September 2024 , and currently trades at $34.69

 
2020 Covid Pandemic

• DD stock fell 55.7% from a high of $64.20 on 1 January 2020 to $28.46 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 24 November 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read DD Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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