DowDuPont (DWDP) Earnings Top Estimates In Q3, Revenues Lag

DowDuPont Inc. (NYSE:DWDP) recorded earnings (on a reported basis) from continuing operations of 21 cents per share for third-quarter 2018, compared with 33 cents per share it logged in the comparable quarter a year ago.

Barring one-time items, earnings came in at 74 cents per share for the third quarter that topped the Zacks Consensus Estimate of 71 cents.

DowDuPont raked in net sales of $20,123 million for the reported quarter, up 10% from the year-ago adjusted sales. It fell short of the Zacks Consensus Estimate of $20,305 million.

The company witnessed higher sales volumes and gains in local prices across all segments and geographic regions. It also gained from strong customer demand.

Volumes (as adjusted) rose 5% in the quarter with gains witnessed in all regions and segments. The company saw a 5% rise in adjusted local prices on gains across the board.

Segment Highlights

Materials Science: Revenues from the division went up 13% from the year-ago adjusted sales to $12.4 billion in the quarter on gains in all segments and regions. Volume rose 6% while local price went up 7%.

Specialty Products: Revenues from the division rose 8% to $5.7 billion with gains witnessed in all regions and most segments. Volume rose 3% while local price increased 2%.

Agriculture: Net sales from the division rose 2% to $1.95 billion in the reported quarter on the back of higher volume and increased local price in Latin America. Organic sales went up 11% as volumes rose 8% while pricing improved 3%.

Financials

DowDuPont had cash and cash equivalents of roughly $6.9 billion at the end of the quarter. Long-term debt was roughly $27.3 billion.

DowDuPont returned nearly $2 billion to shareholders in the reported quarter through dividends and share repurchases. The company also declared a new share repurchase program worth $3 billion

Outlook

Moving ahead, DowDuPont is seeing strong global demand for its products, aided by business investment, manufacturing output, job growth and wage increases. It will remain focused on driving top-line growth from above-GDP demand growth for its products and new product launches as well as delivering productivity and cost synergy savings.

DowDuPont achieved cost synergy savings of more than $450 million in the third quarter. The company raised its cost synergy commitment to $3.6 billion from its earlier expectations of $3.3 billion. Moreover, it increased the expected year-over-year savings for 2018 to $1.5 billion from $1.4 billion.

Price Performance

DowDuPont has underperformed the industry it belongs to over the past three months. The company’s shares have lost around 18.8% over this period, compared with roughly 15.2% decline recorded by the industry.

Zacks Rank and Stocks to Consider

DowDuPont currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Methanex Corporation (NASDAQ:MEOH) , KMG Chemicals, Inc. (NYSE:KMG) and CF Industries Holdings, Inc. (NYSE:CF) , each carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have rallied around 30% over a year.

KMG Chemicals has an expected long-term earnings growth rate of 28.5%. The company’s shares are up roughly 37% over a year.

CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained around 25% in a year’s time.

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