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Why DuPont Stock Trounced the Market on Tuesday
Key Points
It delivered growth on both the top and bottom lines for the period.
It topped analyst estimates for both line items.
The chemical industry is in a prolonged global slump these days, so it was heartening to learn that DuPont (NYSE:DD) had a beat-and-raise third quarter despite that considerable challenge. The veteran American chemical company posted its third-quarter results Tuesday morning, and the reaction to them was strongly positive -- so much so that its stock closed the day almost 9% higher.
Beating and raising
DuPont also posted strong growth in key fundamentals. Its net sales for the quarter rose by 4% year over year to just under $1.87 billion, while net income from continuing operations under generally accepted accounting principles (GAAP) surged by 68% to $171 million. Non-GAAP (adjusted), per-share profitability also bounced, improving by 62% to $2.09.
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With those results, the company edged past the average analyst estimate of $1.84 billion for revenue. It notched a more convincing bottom-line beat, as those pundits were collectively modeling an adjusted earnings per share (EPS) figure of $1.86.
Compounding the two beats, DuPont also substantially raised its bottom-line guidance for the entirety of 2026. Management now believes the company's adjusted EPS will come in at $7.47 to $7.52, well up from its preceding range of $7.17 to $7.32. It didn't tweak its net sales projection much; it has been narrowed to roughly $7.19 billion, down from a range of $7.16 billion to $7.19 billion.
Success with selected segments
DuPont posted strong showings in the healthcare, aerospace, and industrial water client segments. These made up for sluggishness in the lines most exposed to the downcycle.
DuPont's management has proven very nimble in divesting businesses subject to the cycle and in concentrating on segments with resilient demand. This has rightfully made investors significantly more bullish on its prospects, although I'd caution that the overall market remains weak. On Tuesday, the stock approached its one-year high, but I suspect it could top it soon.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.