Is It Time To Consider Buying DuPont de Nemours, Inc. (NYSE:DD)?

By
Simply Wall St
Published
February 03, 2022
NYSE:DD
Source: Shutterstock

DuPont de Nemours, Inc. (NYSE:DD) saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on DuPont de Nemours’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for DuPont de Nemours

Is DuPont de Nemours still cheap?

DuPont de Nemours is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 27.65x is currently well-above the industry average of 21.54x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that DuPont de Nemours’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of DuPont de Nemours look like?

earnings-and-revenue-growth
NYSE:DD Earnings and Revenue Growth February 3rd 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. DuPont de Nemours' earnings over the next few years are expected to increase by 68%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? DD’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe DD should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on DD for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for DD, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about DuPont de Nemours as a business, it's important to be aware of any risks it's facing. For example, DuPont de Nemours has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

If you are no longer interested in DuPont de Nemours, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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