DuPont
A simpler, cash‑rich advanced materials platform anchored in water and healthcare
New DuPont is now a two‑segment advanced materials company focused on Healthcare & Water Technologies and Diversified Industrials after completing the spin of its Electronics business as Qnity on November 1, 2025 and announcing the sale of the Aramids (Kevlar and Nomex) business expected to close in the first quarter of 2026. These portfolio moves reduce cyclicality, sharpen focus on end markets with structural growth, and should lift margins over time.
Management targets organic growth of 3 to 4 percent, EBITDA margin expansion of 150 to 200 basis points through 2028, and free cash flow conversion above 90 percent.
On a pro forma basis, management guided 2025 new DuPont net sales of about 6.865 billion dollars and operating EBITDA of about 1.575 billion dollars, implying an EBITDA margin near 24 percent.
Using these disclosures and the 2026 to 2028 free cash flow outlook of 2.7 to 2.8 billion dollars cumulative, we estimate new DuPont’s current TTM free cash flow around 0.9 billion dollars, or roughly 2.15 dollars per share on about 419 million shares.
Balance sheet strength looks solid with a BBB+/Baa1 investment‑grade profile and a stated net debt to EBITDA target under 2 times.
Does DuPont have a strong competitive moat?
Strengths come from switching costs and brands embedded in customer qualifications and regulatory files. Tyvek is the healthcare sterile‑barrier standard with high requalification hurdles. Liveo medical silicones and Spectrum Plastics components integrate into validated device manufacturing.
FilmTec membranes support mission‑critical desalination and ultrapure water, where redesigns are costly and risky. Auto and industrial adhesives (BETAMATE/BETASEAL) are specified into OEM platforms and EV battery assemblies, creating multi‑year switching frictions. These confer pricing resilience and retention rather than true monopoly power.
Network effects are negligible. Cost advantages are moderate and stem from scale, process know‑how and global manufacturing, but rivals like Henkel, Sika, Toray, Nitto (Hydranautics) and Veolia/SUEZ remain formidable. The pending divestiture of Aramids removes two iconic brands, slightly diluting the brand moat but improving portfolio focus.
Weighting switching costs and intangibles highest yields a solid but not impregnable moat.
Does DuPont have pricing power in its industry?
Historical consolidated gross margins near 30 percent and pro forma EBITDA margins around 24 percent indicate healthy unit economics. In healthcare packaging and medical silicones, willingness‑to‑pay and regulatory lock‑in support steady price/mix.
Water membranes can sustain price amid performance gains, energy savings, and long qualification cycles. Adhesives have selective pricing power when tied to platform launches or safety‑critical uses, though they are more exposed to competition.
Net, pricing power is good but not monopolistic; the portfolio tilt toward healthcare and water increases resilience over time.
How predictable is DuPont's business?
Healthcare & Water Technologies has recurring, specification‑driven demand with secular tailwinds from biopharma, medical devices, water scarcity and regulation. Diversified Industrials serves auto, building and aerospace; auto and construction introduce macro cyclicality and tariff sensitivity.
Management’s 2025 guidance and 2026‑2028 framework imply modest organic growth and high cash conversion, supporting medium predictability post‑spin. Completion of the Qnity separation and the agreed aramids sale reduces exposure to more volatile profit streams, while leaving manageable cyclical elements.
Is DuPont financially strong?
Pro forma debt around 3.25 billion dollars, targeted cash near 1 billion dollars, and a goal of sub‑2.0x net debt to EBITDA, plus BBB+/Baa1 ratings, point to a conservative capital structure.
Transaction‑adjusted free cash flow was 1.8 billion dollars in 2024 for total DuPont, and the new DuPont plan calls for >90 percent cash conversion with cumulative 2.7 to 2.8 billion dollars FCF in 2026‑2028. Liquidity is supported by undrawn revolvers and commercial paper backstops.
Residual PFAS liabilities are shared under the 2021 cost‑sharing framework, and the August 2025 New Jersey settlement was sized with long amortization, both mitigating tail risk though not eliminating it.
How effective is DuPont's capital allocation strategy?
Management has executed large, value‑focused portfolio actions: sale of Mobility & Materials, termination of Rogers when approvals failed, acquisition of Spectrum Plastics to scale healthcare, spin of electronics as Qnity, and a signed deal to divest Aramids.
Post‑spin, a 2 billion dollar repurchase authorization and a new dividend aligned to a 35 to 45 percent payout signal balanced returns with reinvestment in secular growth. The stated M&A approach is bolt‑on and returns‑driven.
Execution risk remains around integration and timing of divestiture proceeds deployment, but the multi‑year track record is strong.
Does DuPont have high-quality management?
CEO Lori Koch, formerly CFO, took the helm on June 1, 2024 with Executive Chairman Ed Breen continuing to steward portfolio strategy. The team has communicated a clear operating system, medium‑term financial guardrails, and a disciplined capital policy.
Credibility is helped by execution on the Qnity spin timeline and proactive steps to streamline costs. Management’s incentives appear aligned with cash generation and ROIC expansion, though proof over a full cycle post‑spin is still ahead.
Is DuPont a quality company?
DuPont is a good quality company with a quality score of 74/100
- Portfolio reset is largely complete: electronics spun into Qnity and aramids sale agreed, leaving a simpler platform in healthcare, water, adhesives, films and engineered polymers with mid‑20s EBITDA margins.
- Moat is driven by switching costs and brands: Tyvek in sterile medical packaging, Liveo medical silicones, FilmTec reverse‑osmosis membranes, and specified auto adhesives create requalification barriers and recurring demand.
- Cash generation should be robust: management targets >90 percent EPS‑to‑cash conversion and outlines 2.7 to 2.8 billion dollars of free cash flow over 2026‑2028, with disciplined reinvestment and buybacks.
- Balance sheet and capital returns: pro forma debt about 3.25 billion dollars, BBB+/Baa1 ratings, and a new 2 billion dollar repurchase authorization post‑spin signal confidence in cash flows.
- Key risks: auto and construction cyclicality in Diversified Industrials, tariff sensitivity, and residual PFAS liabilities under cost‑sharing agreements and recent settlements.
What is the fair value of DuPont stock?
Is DuPont a good investment at $47?
The following analysis is provided for informational and educational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. The opinions expressed are based on publicly available information and historical data. Beanvest and its contributors may hold positions in the securities mentioned. Investors should conduct their own due diligence or consult a licensed financial advisor before making any investment decision.