DuPont: Earnings Preview

| About: E. I. (DD)

E. I. Du Pont de Nemours and Company (NYSE:DD) is scheduled to report its first-quarter 2012 results before the market opens on Thursday, April 19. The Zacks Consensus Estimate for the quarter is $1.55 per share, representing an estimated year-over-year increase of 2.11%.

With respect to earnings surprises, the company outdid the Zacks Consensus Estimate in the trailing four quarters. This is reflected in the average earnings surprise of 10.81%, with positive surprises in all the four quarters.

Fourth Quarter and Full-year 2011 Recap

DuPontreported earnings of 35 cents per share in the fourth quarter of 2011 compared with 50 cents in the year-ago quarter. The results exceeded the Zacks Consensus Estimate of 33 cents. For full year, the company reported earnings of $3.93 per share, up 20% from $3.28 per share in 2010, exceeding the Zacks Consensus Estimate by a penny.

Sales in the fourth quarter grew 14% year over year to $8.4 billion driven by an increase in prices. Besides, the agriculture segment also contributed to the growth. The quarter witnessed declining sales volumes due to destocking in photovoltaics, polymer and industrial supply chains. The consumer electronics and construction division also faced soft demand. For fiscal 2011, sales jumped 20% to $38 billion.

Company's Guidance

DuPont reiterated its full-year 2012 earnings outlook of $4.20 to $4.40 per share, an increase of 7% to 12% compared with 2011, excluding significant items.


Estimates for DuPont elicit limited movements.Over the past 30 days, 1 analyst (out of 17) has raised his/her estimate for the first quarter while none moving in the opposite direction. There was a solitary upward movement over the past week. A similar trend applies for fiscal 2012.


Over the last 30 days, the Zacks Consensus Estimate for the first quarter has increased by a penny to $1.55 per share while remaining static over the last 7 days. For fiscal 2012, the estimate remain static (at $4.26) over the last week and month.

Our View

DuPont's Consumer electronics segment demand has softened, while housing and construction markets continue to remain weak. The slowdown in the global economic growth is anticipated to reduce the company's capital spending, thereby adversely affecting its operating performance.

Further, DuPont faces stiff competition from The Dow Chemical Company (NYSE:DOW) and BASF SE (OTCQX:BASFY). However, markets for the company's agriculture and food businesses continue to be strong, especially with a strong planting season in Latin America.

DuPont currently retains a Zacks #3 Rank, reflecting a short-term (1 to 3 months) Hold rating. Currently, we have a long-term (more than 6 months) Neutral recommendation on the stock.

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