How to select a stock using DuPont analysis? | Hands-on Guide to Reading Financial Statements #22

Another key metric is Return on Equity (ROE), a favorite of Mr. Buffett. ROE explicitly tells investors how much profit is generated for every dollar invested in equity. To reiterate: ROE = Net Income / Average Shareholders’ Equity. From this formula, it’s clear that Return on Total Assets (ROA) incorporates the effect of leverage, whereas ROE does not. For example, consider two companies each with $1,000 in equity and $200 in net profit. Company A borrows $500, while Company B takes on no debt. Although both report identical ROEs of 20%, Company B’s ROA is higher—at 20%—indicating stronger underlying profitability and zero leverage risk. Next, we turn to growth analysis. Today, evaluating a company almost always begins with its growth potential: without growth, there’s little room for imagination—and little upside for the stock price. Common growth metrics include revenue growth rate and operating profit growth rate. Others include shareholders’ equity growth rate and total assets growth rate. Their calculation methods are self-evident from their names—for instance, operating profit growth rate = (Current Period Operating Profit − Prior Period Operating Profit) ÷ Prior Period Operating Profit. The real challenge lies in forecasting a company’s growth over the next several years—a task especially difficult for individual investors. Fortunately, many institutions publish earnings forecasts and research reports; our job is simply to understand them. After covering growth analysis, let’s discuss management capability analysis. Common metrics include inventory turnover ratio and accounts receivable turnover ratio—many of which we’ve already addressed earlier. For example, when reviewing the balance sheet, we emphasized that changes in various receivables should align with changes in revenue. Since accounts receivable turnover ratio = Revenue / Average Accounts Receivable, the ratio remains stable only when the percentage change in revenue matches that of accounts receivable. Thus, a declining accounts receivable turnover ratio signals relaxed credit terms or aggressive sales policies aimed solely at boosting top-line revenue. Inventory turnover ratio = Cost of Goods Sold / Average Inventory. A higher ratio indicates less capital tied up in inventory and stronger managerial control over inventory—often suggesting strong product demand. Finally, we come to holistic analysis—where we deploy one of the greatest analytical tools ever invented: DuPont Analysis. Pioneered by the U.S.-based DuPont Company, this method dissects ROE to assess a company’s overall performance. As previously noted, if only one metric could be used to judge a company’s quality, it would be ROE. And ROE can be decomposed as follows: ROE = Net Income / Equity = (Net Income / Revenue) × (Revenue / Total Assets) × (Total Assets / Equity) = Net Profit Margin × Total Asset Turnover × Leverage Ratio.

From 'Material Supplier' to 'Collaborative Partner': DuPont Empowers the Transformation of Future Mobility Through Its Three Pillars—Safety, Quietness, and Reliability

From macro-level body vibration damping to differential gear anti-wear quieting, and further to high-speed, smooth operation of planetary gear sets, DuPont orchestrates a 'triple concerto'—leveraging rubber-to-metal bonding solutions, MOLYKOTE® specialty lubricants, and Vespel® high-performance wear-resistant materials—to build an impregnable NVH (Noise, Vibration, and Harshness) firewall for new-energy vehicles. Serving as the cornerstone of this defense system, DuPont’s high-performance rubber-to-metal bonding solutions comprehensively enhance vehicle structural strength, energy efficiency, and passive safety—thereby optimizing overall vehicle NVH performance. DuPont™ MEGUM™ and THIXON™ series adhesives feature custom-formulated chemistries precisely engineered to bond diverse substrates—including steel, aluminum, engineering plastics, and composites—even under harsh operating conditions such as high temperature, severe vibration, oil contamination, or dynamic loading—while maintaining exceptional adhesion and long-term stability. These solutions are widely deployed in critical components such as hoses, vibration-damping mounts, bushings, and seals—effectively eliminating sources of abnormal noise and blocking vibration transmission. DuPont also offers green solutions compliant with stringent regulations on volatile organic compounds (VOCs) and hazardous air pollutants (HAPs). As e-axle oils trend toward lower viscosity to improve energy efficiency, conventional differential washer coatings easily fail under high-torque conditions—leading to gear surface wear and unpleasant low-frequency noise. Compared to traditional QPQ (quench–polish–quench) treatments or standard molybdenum disulfide coatings, MOLYKOTE® D-6818 anti-friction coating delivers superior wear resistance and load-carrying capacity—even in ultra-low-viscosity lubricant environments. By significantly extending wear life, it effectively suppresses differential noise caused by micro-pitting and dry friction—ensuring smooth, silent operation even under full-load and high-torque output. To meet demands for compact packaging and extended driving range, premium EV models increasingly adopt high-density, coaxial planetary gear reducers. However, the high rotational speeds and heavy loads generate elevated temperatures and wear risks—easily triggering mid-to-high-frequency gear whine or even seizure, directly compromising auditory comfort. Specifically engineered for extreme conditions, Vespel® SPV-294 polyimide thrust washers—highly wear-resistant and self-lubricating—deliver upgraded ultra-high PV (Pressure × Velocity) limits while retaining outstanding thermal stability and dimensional stability. They establish a stable, non-metallic load-bearing interface during high-speed rotation—eliminating direct metal-to-metal contact, markedly reducing high-frequency whine and vibration caused by wear, preventing seizure, and delivering silky-smooth operation for high-power-density electric drive systems. Reliability: Building a High-Resilience Supply Ecosystem DuPont has established multiple Global Centers of Excellence (COEs), R&D centers, and manufacturing facilities across North America, Europe, and Asia—forming an intelligent, highly coordinated support and supply network. This is more than geographical coverage: it represents a global deployment of R&D capabilities, methodologies, engineering standards, and production capacity. Each center integrates end-to-end capabilities—from advanced materials testing and computer-aided engineering (CAE) simulation, component-level design and rapid prototyping, to system-level engineering integration and pilot-scale adhesive application and assembly—all rigorously aligned with OEM and Tier-1 supplier development timelines and validation protocols.

Iams Wealth Management LLC Purchases 16,038 Shares of DuPont de Nemours, Inc. $DD

14 hours ago

Iams Wealth Management LLC increased its stake in DuPont de Nemours by 174.2% in Q3, acquiring 16,038 shares valued at $3.28 million. Analysts rate the company a Moderate Buy following strong quarterly earnings and a $0.60 dividend declaration.

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Oak Thistle LLC Acquires 46,908 Shares in DuPont de Nemours

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BMO Capital Markets Raises DuPont de Nemours Price Target to $60

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Robeco Institutional Asset Management B.V. Decreases Stake in DuPont de Nemours, Inc.