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Why Analysts Expect a Turnaround for DuPont in 2Q17

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DuPont to announce 2Q17 earnings

DuPont (DD) is set to announce its 2Q17 earnings on July 25, before the market opens. The company will hold a conference call the same day. In this series, we’ll look at DuPont’s expected revenue and analysts’ views on the stock.

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DuPont’s revenue estimates

As of July 19, 2017, analysts expected DuPont to post revenue of $7.3 billion, a rise of 3.3% YoY (year-over-year). DuPont reported revenue of $7.1 billion in 2Q16. If the company manages to meet analysts’ estimates, it will be the first time since 2012 that DuPont achieves growth in the second quarter.

DuPont’s expected revenue growth may be driven by higher sales volumes of new products such as Xtend soybeans, FeXapan herbicide, and Zorvec fungicide. Leptra insect protection, which recorded double digit growth in 1Q17, is seen as a key driving factor in its continued growth. Price increases of several products are also expected to contribute to revenue growth, and the weakness in the US dollar could be another positive factor. In the past three months, the dollar index, which is a measure against a basket of currencies, has fallen approximately 4.7%. 

However, the expected decline in corn acreage could be a challenge for DuPont, and its other reporting segments are expected to remain flat or see a marginal increase. We’ll have to wait and see if DuPont can reverse its declining second-quarter revenue trend in 2Q17.

Investors can indirectly hold DuPont by investing in the iShares US Basic Materials ETF (IYM). IYM has invested 11.8% of its holdings in DuPont. The fund’s top holdings include Dow Chemical (DOW), Monsanto (MON), and Praxair (PX), which have weights of 12.0%, 8.3%, and 6.2%, respectively. In the next part, we’ll look into DuPont’s expected earnings per share in 2Q17.

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