Value Mole's  Instablog

Value Mole
Send Message
I am an individual investor that has spent 8 years on Wall Street and now resides in Shanghai, China. I manage my own portfolio only and my goal is to help all individual investors also become comfortable managing their own money. I focus on value stocks.
  • "Deeper Dig on DuPont" by Value Mole 0 comments
    Jul 29, 2010 3:51 AM | about stocks: DD, MMM

    DuPont (NYSE:DD) recently reported 2Q10 earnings that easily exceeds Wall Street expectations by nearly 25%, reporting 2Q10 EPS of $1.17 per share versus Wall Street average of $0.94 her share.  The Company also raised its 2010 full year projections nearly 15% from $2.50 - $2.70 per share to $2.90 - $3.05 per share.  That type of performance is worthy of a deeper dive. 

    Overview:
    DuPont is one of two specialty materials companies in the Dow, the other being 3M Corp (NYSE:MMM). 



    Segments and Geography:
    The Company operates in several industries: Agriculture (32% of sales), Specialty Chemicals & Materials (21%), Safety & Protection (11%), and Electronics & Comm (6%).  Geographically, the Company operates in U.S./Canada (40% of sales), EMEA (28%), Asia (20%), and Latin America (12%). 



    Valuation:
    The Company currently trades 12.6x 2010E EPS.  This is a 23% discount to 3M Corp (NYSE:MM), which trades at 15.5x 2010E EPS.  The company's 5 year projected EPS growth is 9%, which implies a 1.4x P/E/G.  Dividend yield is 4.20%, or $1.64 per share.  Dividend payout ratio is only 53.8%.  The company has maintained or increased dividend payments in the past 10 years.




    Conclusion:
    We typically look for less than 1.0x P/E/G for a screaming bargain (DD trades at 1.4x), however given that DD is trading at 23% discount to MMM and DD is also paying a 4.3% dividend yield (that will either remain as is or increase given the past 10 year dividend payout history), DD is a steady, low-risk long term investment. 

    Timing wise, we're waiting for the stock to pull back to around $35 per share.  DD is definitely now on our RADAR though.   

    Disclosure: No position

    Stocks: DD, MMM
Back To Value Mole's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • MCD trades at 14.7x P/E, 3.3% dividend, real estate value $30bn (30% of market cap), recession resilient. Bought recently at $88.00.
    Jul 4, 2012
  • BBRY trades at 8.6x 2010E P/E (adjusted for net cash fo $6 per share). With 41% market share of smart phone, is RIMM a deep value play?
    Aug 9, 2010
  • Is HPQ a Buy now? Go with positions in DELL (for hardware) and IBM (for services) instead.
    Aug 8, 2010
More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.