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Analyst Blog

Shares of DuPont (DD - Analyst Report) hit a new 52-week high of $64.70 on Dec 30 and eventually closed at $64.65. The shares of this chemical and life sciences company have been on the rise since it reported solid third-quarter 2013 earnings on Oct 22.

Year-to-date, share price has recorded a healthy return of 48.41%. The company’s long-term estimated EPS growth rate is 8.5%. Average volume of shares traded over the last three months came in at approximately 3.86 million.

Growth Drivers

DuPont posted strong third-quarter results on healthy gains across its electronics and performance materials businesses and agricultural segment. Adjusted earnings per share (barring one-time items) came in at $0.45, beating the Zacks Consensus Estimate by $0.04.

Including one-time items, DuPont registered earnings from continuing operations of $0.28 per share in the quarter compared with a loss of $0.05 per share in the prior-year quarter. Consolidated net income rocketed to $285 million (or $0.30 a share) from $5 million (break even results per share) a year ago.

Net sales for the quarter rose roughly 5% year over year to $7,735 million as higher sales volumes more than offset lower selling prices and unfavorable currency impact.

DuPont is witnessing significant momentum in its agriculture business, driven by higher volume and market share gains in seed genetics and crop protection. A strong start in the North American growing season is boosting its agriculture business. DuPont is seeing healthy demand for its corn hybrids and expects continued strong growth in crop protection in 2013 driven by new products.

DuPont’s acquisition of a majority stake in South Africa-based seed company Pannar Seed (Pty) Limited represents a positive for its agriculture business. Also, the acquisition of Danisco has strengthened DuPont’s presence in the food ingredient and enzyme markets, while expanding its presence in industrial biotechnology and biofuels.

DuPont is focused on an aggressive cost-cutting strategy by reducing fixed costs, retrenching employees, restructuring work schedules and improving working capital productivity.

DuPont is committed to maintaining a strong balance sheet and returning excess cash to shareholders. The company completed its share repurchase program during second-quarter 2013 using proceeds from the divestiture of the performance coating business. Moreover, DuPont has raised its quarterly dividend by 5% to $0.45 per share.

Other Stocks to Consider

DuPont currently carries a Zacks Rank #3 (Hold). Other companies in the chemical industry worth considering are Johnson Matthey plc (JMPLY), PPG Industries Inc. (PPG - Analyst Report) and Methanex Corp. (MEOH - Analyst Report). While Johnson Matthey carries a Zacks Rank #1 (Strong Buy), PPG Industries and Methanex hold a Zacks Rank #2 (Buy).

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