Every weekday, Jim Cramer’s CNBC Investment Club releases the Homestretch, a practical afternoon update to coincide with the last hour of trading on Wall Street. Stocks are down on Tuesday, but well off their trading lows. The S&P 500 and Nasdaq are headed for consecutive declines as AI and data center ramp-up deals subside. The move looks more like profit-taking after a big move than a change in paper, but Micron will need to show in its earnings call after the bell on Wednesday that demand will continue to outpace supply for some time to come. DuPont’s 3-for-1 reverse stock split takes effect Wednesday morning. This is just a cosmetic change and does not affect the value of your investment. Unlike a traditional stock split, where the number of outstanding shares increases and the stock price decreases proportionately, a reverse stock split reduces the number of outstanding shares and increases the stock price proportionately. It is important to note that DuPont has not conducted a reverse stock split to meet exchange listing requirements. Management said the move, following last year’s spinoff of Qnity, will allow DuPont to better align per-share metrics such as stock price and earnings per share with those of its U.S. multi-industry peers. For example, 3M is a reasonable competitor comparison given its exposure to healthcare, water, and industrial markets. 3M’s stock currently trades around $162, and the company is expected to earn about $8.70 a share this year, according to FactSet. By comparison, DuPont’s stock price is about $47 per share, and the company is expected to earn $2.66 per share this year. Although the businesses are not identical, differences in share prices and EPS can make direct comparisons more difficult to assess. Based on the company’s current guidance, DuPont should trade at approximately $141 per share and earn between $7.02 and $7.16 per share after the 3-for-1 reverse stock split. We’re not usually big fans of reverse splits, but when you lay out the numbers, it makes sense to make DuPont’s per share metrics more comparable to those of its peers. Incidentally, Honeywell Technologies also plans to undergo a reverse split immediately after the separation of its aerospace division is completed on June 29th. FedEx is expected to report revenue of $24.04 billion and EPS of $5.96 after Tuesday’s close, according to LSEG. These numbers include FedEx Freight, which was spun off into a separate company earlier this month. Because we previewed it on Sunday, there may be some noise in print, so we’ll highlight CEO Raj Subramaniam’s comments and the slimmed-down company’s earnings trajectory. KB Home also reported on Tuesday. Paychex will report before the opening bell on Wednesday, followed by its May new home sales report in the morning. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
