Earlier within the week, we checked out the upcoming DuPont electronics business spinoff and what investors are getting with the brand new Qnity Electronics, which has a robust foothold within the semiconductor industry. Now, here’s a have a look at what shall be left of the brand new DuPont after the planned Nov. 1 split and the stocks beginning to trade individually two days later. With electronics out of the image, the brand new DuPont will give attention to 4 key markets: health care, water, and diversified industrials. The revenue split is about 25% health care, 24% construction, 22% water, 16% industrials/aerospace, printing and packaging, in addition to 13% automotive. Health care DuPont’s health-care business has been a consistent mid-single-digit organic sales grower with exposure to medical packaging, medical devices, biopharma/pharma, and protective garments. Based on the corporate, greater than 90% of the highest 25 U.S medical device firms use DuPont technology to deliver their most advanced products. The corporate sizes up health care as a $13 billion addressable market that’s growing faster than gross domestic product. It’s led by megatrends resembling single-use systems, occupational safety requirements, higher performance materials, and medical device miniaturization. Water DuPont is a number one player within the water industry, specializing in end markets like industrial water, municipal and desalination, life sciences and specialty, and residential and business. The business also plays a vital role within the semiconductor fabrication process. Over 60% of ultrapure water for semiconductor processes is purified with DuPont’s exchange resins. The corporate views its water franchise as a consistent mid-single-digit organic sales grower operating inside a $7 billion addressable market that’s growing faster than GDP, led by trends like freshwater scarcity, growth of water-intensive industries, increasing regulation, and sustainability. Amongst these trends, management views water scarcity and tightening regulatory requirements as probably the most favorable, with the corporate’s portfolio aligned to each. Remember, DuPont nixed its planned spinoff of water and decided to retain the business inside the latest DuPont to boost the attractiveness of the brand new company. Industrials The commercial side is the more cyclical a part of the business whose fortunes are more closely linked to the broader economy. Here, Dupont has exposure to construction, automotive, industrial and aerospace, and printing and packaging. One area of leadership is in automotive: all top 10 global auto original equipment manufacturers (OEMs) use DuPont’s adhesives. The transition to electric vehicles plays into its hand, with EVs featuring about double the DuPont content in comparison with internal combustion engine vehicles. In aerospace, 97% of aircraft builds use the corporate’s Vespel parts. The corporate views its industrial exposure as a $21 billion addressable market, but growth is heavily depending on GDP and the broader economy. Some megatrend growth drivers the corporate identified are electrification, the shortage of homes within the U.S., aerospace, and sustainability. Financials Let’s turn to the financials. Looking back, Dupont’s net sales have increased at a 2.4% compound annual growth rate from 2019 to 2025, matching the typical of a multi-industry peer set provided by the corporate. That peer set includes 3M , Parker-Hannifin , Illinois Tool Works , ITT , and fellow Club names Honeywell and Dover . The corporate’s EBITDA margin in 2025 is a bit of below the peer set average at 23.6% versus 25.7%. From a valuation standpoint, DuPont trades at an Enterprise Value to EBITDA multiple of 11.4, representing a large discount to the peer average multiple of 16.7. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. Sure, DuPont’s margins trail the group a bit, but we have at all times thought the market’s discount goes too far. A part of this discount could also be related to DuPont’s lingering liability around PFAS perpetually chemicals, despite the corporate’s multiple efforts to ring-fence and contain its legal exposure. There’s also been a ton of moving parts to the DuPont story through the years. Between combos, breakups, divestments, and acquisitions, it is not at all times been a transparent picture. Looking forward, management’s medium term financial targets, through 2028, call for 3% to 4% sales growth compound annual growth rate (CAGR). The mathematics behind DuPont’s revenue goal relies on 5% organic CAGR growth in Healthcare and Water markets and a couple of% organic CAGR growth in constructing and industrial end markets. On margins, Dupont is targeting a 150 to 200 basis point improvement in operating EBITDA margin, driven by leverage on net sales growth, stranded cost reduction related to the spin, and a profit from productivity initiatives. Turning to the underside line, management is targeting 8% to 10% adjusted EPS growth compound annual growth rate. Excess free money flow used for mergers and acquisitions (M & A) or share buybacks could be incremental to the earnings growth rate. DD YTD mountain DuPont YTD The corporate has a protracted history of lively portfolio management. It’s moved out of slower growing, lower-margin business and used its excess money to amass secular-growing, higher-margin assets. More recently, the corporate announced in August that it’ll divest its Aramids business in a deal that values it at $1.8 billion. The Aramids business is home to the synthetic fiber brands Kevlar and Nomex that concentrate on fields like heat resistance and private protection. We expect management will use the money proceeds from this sale to bulk up its healthcare and water business. By doing so, the corporate should see an improvement in its overall growth rate and margins, which could help the stock command a multiple closer to peers available in the market. What about valuation? The right way to value latest Dupont has created an investor debate that won’t as clear-cut as Qnity. In theory, shedding a better multiple asset, like Qnity, should end in some type of multiple compression for the brand new DuPont. But the corporate currently trades at a heavy discount versus its multi-industry peers. There ought to be some appreciation for a more simplified structure and management, but easy methods to value the business shall be more of an art than a science. Bottom line It has been a protracted 18 months since DuPont announced its plan to separate up. Throughout this time, the stock has been stuck in what’s often called spin purgatory , with investors delaying interest in DuPont until closer to the breakup date. The tip of this waiting game is finally near. With the spin in sight, our thesis stays that the upcoming breakup will allow each latest firms to trade at multiples closer to peers, thereby creating value for shareholders. (Jim Cramer’s Charitable Trust is long DD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked a couple of stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Eli Lilly Novo Nordisk stock fall on Trump GLP-1 price comments
Shares of Eli Lilly and Novo Nordisk dropped Friday, after President Donald Trump said his administration goals to chop the...
