DuPont on Wednesday reported another beat-and-raise quarter, continuing a recovery partly driven by growing demand for AI chips — and rewarding our patience with the stock. Net sales in the three months ended June 30 totaled $3.17 billion, topping the $3.05 billion estimate, according to LSEG. Sales rose 2.5% on an annual basis and 8.2% compared with the first quarter. Adjusted earnings per share (EPS) increased 14.1% year over year to 97 cents, exceeding expectations of 85 cents, LSEG data showed. Operating EBITDA of $798 million in the quarter came in ahead of the $716 million consensus, according to estimates compiled by FactSet. EBITDA — a measure of profitability — is short for earnings before interest, taxes, depreciation, and amortization. DuPont Why we own it: We added this specialty chemical maker as an industrial way to play the recovery in the semiconductor and electronics industries, which have strong multiyear outlooks due to advancements in AI. The company also is getting past excess inventory issues in a few business lines. More recently, DuPont’s plan to split itself into three separate companies has sweetened the investment case. Competitors : 3M , PPG Industries Most recent trade : June 14, 2024 Initiated : Aug. 7, 2023 Bottom line DuPont has turned the corner, and now it is hitting full stride on its recovery. On the back of the strong second-quarter results and raised full-year guidance, shares are deservedly up about 5% Wednesday and on pace for their best day since DuPont’s first-quarter earnings report May 1. That also was a beat-and-raise release . “This can go higher,” Jim Cramer said on Wednesday’s Morning Meeting. Leading the charge is its electronics and industrial segment, which delivered better-than-expected sales, EBITDA and margin in the second quarter. Improvements in the electronics market, a key reason we invested in the company last year, are showing up in a big way. DuPont’s semiconductor technologies business saw year-over-year volume growth north of 20% in the second quarter, driven by increased demand for its chemicals used in the manufacturing of artificial intelligence chips. Its Interconnect Solutions unit — serving end markets including smartphones and other consumer electronics — tallied mid-teens volume growth on an annual basis. Interconnect Solutions is benefiting from a “broad-based” comeback in consumer electronics demand, executives said. It’s a highly encouraging situation and certainly sounds in line with what fellow Club holding Advanced Micro Devices had to say on AI chips and personal computers Tuesday night . “We’re well into the recovery phase from last year’s inventory corrections in most key end markets, and electronics may be setting up for a prolonged positive cycle,” Executive Chairman Ed Breen said on the earnings call. DuPont’s water and protection segment may have seen a year-over-year decline in sales, but what matters most is that revenue was up 8% sequentially….
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