DuPont: 4% Yield And Rapidly Rising Revenues

Oct.11.11 | About: E. I. (DD)
I recently wrote a piece on Dow Chemical’s (NYSE:DOW) undervaluation. Another chemical firm with a low valuation and high dividend yield is DuPont.
DuPont (NYSE:DD) – “E. I. du Pont de Nemours and Company operates as a science and technology company worldwide. It operates in seven segments: Agriculture & Nutrition, Electronics & Communications, Performance Chemicals, Performance Coatings, Performance Materials, Safety & Protection, and Pharmaceuticals.” (Business Description from Yahoo Finance)
8 reasons Dupont is a great value at $43:
  1. Dupont has an A rated balance sheet and yields 3.9%.
  2. DD has beat earnings estimates 11 of the last 12 quarters. Its average beat over the consensus the last four quarters has been 20%.
  3. The expansion of natural gas production in the United States is helping DuPont by keeping one of its main feedstock costs low.
  4. Earnings estimates for 2011 and 2012 have risen over the last ninety days.
  5. Dupont is experiencing rapidly increasing revenue growth, north of 20% in 2011 and expected to be 10% in 2012.
  6. Its agricultural division (25% of revenues) is a good secular play on increasing demand for food in the emerging markets.
  7. DuPont has a forward P/E of just 9.6, which is a 30% discount to its five year historical valuation.
  8. DD is selling under analysts’ price targets. The median analyst target on DD is $61.50, S&P is at $60 and Credit Suisse has a price target of $62 on DuPont.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DD over the next 72 hours.