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Update: DuPont's Spin-Off One Step Closer As Company Transforms Towards Possible Acquisitions
- The company’s spin-off of their titanium dioxide, fluoroproducts and chemical solutions business remains on track for a mid-2015 spin-off.
- The company’s transformation will allow them to focus on agriculture, nutrition, industrial biosciences, and advanced materials and save $1 billion.
- The company’s spin off of their performance chemicals division will further their gradual transformation to high-growth, less cyclical businesses.
- The company’s transformation and cost savings will allow them to pursue strategic acquisitions, such as FMC Corporation.
- We did anticipate the timing of the spin-off as the company had indicated such timing well in advance.
DuPont Shares Appear Overvalued By 30% - Investors Should Be Cautious
- Shares of DuPont trade at 15 times forward earnings, the highest multiple the firm has seen over the last five years.
- The firm's return on invested capital has declined recently, but it still compares favorably with other large cap chemical companies.
- With future earnings growth expected to accelerate but remain in single digits, the company's fundamentals are not strong enough to warrant its current valuation.
- DuPont's history of earnings volatility make it difficult to forecast EPS.
- I think estimates going forward are too high and that EPS growth should be discounted by investors because of DuPont's extreme earnings volatility.
- DuPont is worth about $70 right now, making it fairly valued.
- I think there are better places for your money right now despite the dividend.
- A couple of the biggest chemical companies are facing activist pressure.
- Nelson Peltz has taken his fight against DuPont to the public domain.
- He’s pushing for a breakup, but the company won’t go lightly.
- E.I. Dupont De Nemours & Co. (DD) is a 36B manufacturer of agricultural products, photovoltaics and consumer electronics such as TiO2, refrigerants, protection products and construction.
- Our grade shows a reflection of the company’s financial strength, economic moat, management ability and dividend/buyback trends - and indicated theres more to the story.
- DuPont provides potential for investors in the long-term as agricultural business should have improved performance, benefits from streamline are realized and the global recovery boosts earnings.
DuPont Likely To Take Over FMC Corp. In The Intermediate Term
- DuPont is in transformation as it remains focused on agriculture, nutrition, industrial biosciences, and advanced materials.
- DD will spin off its performance chemicals division in mid-2015 as it gradually alters its focus to high-growth, less cyclical businesses.
- FMC Corporation, also in transition, has businesses exposed to favorable secular growth trends in agriculture, lithium use in electronic-vehicle manufacturing), and an aging population favoring their health and nutrition products.
- With DuPont remaining focused on agriculture, nutrition, industrial biosciences, and advanced materials, the transforming FMC appears to be an attractive takeover candidate.
- DuPont is not your grandfather's chemical company anymore.
- Cash flow is weakening, earnings are modest, and the dividend doesn't pay you enough for the risk.
- DuPont is vastly overpriced. Sell it now and replace it with Dow Chemical.
- DD has not been growing rapidly.
- But the multiple is 18x.
- On the surface it looks rich.
Upstart Argex Titanium And DuPont Headline World TiO2 Summit
- Titanium Dioxide (TiO2) is an $18 billion specialty chemical industry.
- DuPont is the world’s largest producer but is exiting (spinning off) the business.
- Start-up Argex Titanium has developed an innovative, proprietary technology which cuts TiO2 production costs by up to 50%.
- The TiO2 industry is taking Argex seriously – investors should also –.
- The last of 19 million overhanging warrants expire Monday September 29th.
DuPont: Should You Take Your Chips Off The Table Or Stay Invested?
- Chemical business DuPont is under pressure from an activist investor to break itself up.
- Nelson Peltz and his fund push for change and criticize DuPont's recent performance.
- Activist involvement has been a major catalyst for DuPont's stock price so far.
- Will we see new 52-week highs?
- Analysts are expecting DuPont to grow in the 7-8% range over the intermediate-term.
- Using a bit of caution, a 6% growth expectation would result in 5-year total annualized return expectation around 6% as well.
- More importantly, this article provides two tables that allow the readers to come to their on conclusions.
Dupont Nice But Boring, While Eastman Chemicals Provides Twice The Return On Cash
- Du Pont fairly priced; defensive, but nothing exciting.
- Eastman Chemicals is more resilient in its product range, as it is supplying other agrochemical producers.
- Since they are about equal in terms of yield, it comes down to ROA; Eastman is cheaper, and hence the better alternative.
High-Yielding DuPont Is Having A Hard Time Making Upward Traction
- The stock continues to be undervalued based on 2015 earnings estimates, but those estimates have decreased in the past few months.
- I calculate a pretty good reward/risk ratio, but the momentum seems to be heading in the wrong direction for that situation.
- Management continues to try and create shareholder value by selling off the majority stake in a JV the company owned.
- DuPont reported its second quarter results. It declared EPS of $1.17 reflecting a decrease of 9 percent compared to the figure reported in the second quarter of 2013.
- The company also re-affirmed its full year EPS outlook that is expected to be in the range of $4.00-$4.10 per share.
- The agriculture segment constitutes a major share of total revenues at 37 percent and is also expected to improve its performance.
- The performance chemicals separation is on track and is expected to be completed by the middle of 2015.
DuPont Second Quarter Earnings Wither With Lower Corn Seed Volumes
- Sales and earnings decreased from the prior year.
- The decrease in earnings and sales were in-line with what the company announced in late June.
- On the bright side, the company decided to increase the dividend by 4.4%.
- DuPont shares have moved lower after the company lowered its second-quarter earnings guidance.
- DuPont has been engaged in active discussions with activist investor Nelson Peltz.
- DuPont is trading at a reasonable valuation.
- DuPont recently announced a $5 billion buyback plan.
- The whisper number is $1.24, seven cents ahead of the analysts' estimate.
- DuPont has a 67% positive surprise history (having topped the whisper in 29 of the 43 earnings reports for which we have data).
- Overall historical data indicates the company to be (on average within thirty trading days) a "positive" post earnings price reactor when the company reports earnings.
DuPont - The Latest Profit Warnings Just Show The Need For Restructuring
- DuPont issues a modest profit warning for 2014.
- The warning once more underlines the need for focus and speeding up of the transformation process.
- Shares offer appeal for dividend collectors, yet long term track record and appeal is modest.
Why DuPont Stock Is Still A Long-Term Investment Opportunity
- DuPont is a good combination of good value and solid growth dividend stock.
- DuPont will benefit from the anticipated growth in global industrial market demand.
- DuPont returns value to its shareholders by stock buyback and by dividend payments.
Thu, Feb. 6, 11:56 AM
- The market seems to view DuPont (DD +1.3%) as a stodgy chemical company, but it is one of the world's biggest sellers of seeds, pesticides, fertilizers and other crop protection products; a Barron's profile says shares could climb 20% as investors start to give DuPont credit for those businesses.
- DuPont delivered better than expected Q4 earnings last week, helped by fast-growing sales in its agriculture division; the unit contributed ~40% of 2013 operating profit and is DD's fastest-growing business, with sales that could rise at a double-digit rate during the next few years.
- Compared with companies focused on agriculture chemical products, DD has been trading at a discount, at 14.2x estimated 2014 earnings; investors pay 19x-20x estimated earnings for Monsanto (MON) and Potash (POT).
Fri, Jan. 31, 1:01 PM| Comment!
Wed, Jan. 29, 2:49 PM
- Today's strength in Gevo (GEVO +9.7%) is attributed to a Bloomberg story that butanol may be in U.S. pumps as soon as next year in a challenge to ethanol’s domination of the $26B renewable fuels market.
- Butamax Advanced Biofuel, funded by DuPont (DD) and BP, is retrofitting an ethanol plant in Minnesota to begin making butanol in commercial volumes in 2015, and Gevo, backed by Total (TOT) and billionaire Richard Branson, already runs a distillery in the state; both groups say they’ve lined up clients for large-scale deliveries.
- “With ethanol dominant as a gasoline additive, the U.S. fuel industry simply hasn’t had much reason for adoption of butanol, [but] that may be starting to change now that ethanol is hitting a blend wall," says Raymond James analyst Pavel Molchanov.
Tue, Jan. 28, 7:09 AM
- Du Pont (DD) net profit doubles to $185M, lifted by strong insecticide sales in Latin America and earlier seed shipments in North America.
- Segment operating earnings +52% to $939M.
- Agriculture operating earnings $88M vs seasonal operating loss of $77M a year earlier. Electronics & Communications +116%, Safety & Protection +57% and Nutrition & Health +40%.
- Announces $5B share-repurchase program, with $2B expected to occur in 2014.
- Expects 2014 operating EPS of $4.20-4.45 vs consensus of $4.31. (PR)
Tue, Jan. 28, 6:03 AM| Comment!
Tue, Jan. 28, 12:05 AM
Mon, Jan. 27, 5:30 PM
Thu, Jan. 9, 2:56 PM
- DuPont (DD +0.9%) is upgraded to Buy from Neutral with a $70 price target at BofA/Merrill.
- The firm believes DD stands to benefit from a confluence of favorable circumstances: (1) projected acceleration of global growth; (2) ongoing portfolio improvement via the pending separation of Performance Chemicals; (3) growing financial flexibility that should support future dividend increases; and (4) inexpensive valuation relative to history and industry peers.
- Separately, Executive VP Mark Vergnano is appointed CEO of the titanium dioxide business when it is spun off next year.
Wed, Jan. 8, 10:34 AM
- "The Safety Bubble Deflates," goes the title of a new report from Bernstein's Seth Masters, adding his name to those voices suggesting "safe" assets have become otherwise.
- Even though utilities, telecom, and consumer staples have underperformed of late, says Masters, their relative valuations are still well above the average over the last 50 years. "In periods of stress, investors tend to prize stability and safety too much. But in time, investors discover that every investment carries with it some degree of risk: if not risk of loss, then risk of inadequate growth."
- Related ETFs: XLU, IDU, VPU, NLR, GRID, JXI, NUCL, DBU, IPU, RYU, PUI, UPW, FXU, SDP, PSCU, AXUT, FUTY, UTLT, XLP, VDC, FXG, RHS, FSTA, PSL, PSCC, IYZ, VOX, IXP, IST, XTL, LTL, FCOM, TLL, AXTE
- Barron's Jack Hough says the "low beta" approach is a flawed one: First, volatility can change quickly as companies' or industries' fortunes shift; Second, beta tells one nothing about whether a stock's valuation is high or low. In a similar warning over low volatility stocks, BAML suggests looking for companies with smooth earnings rather than smooth stock prices. Screening for such, Hough finds CSX Corp (CSX -0.6%), DuPont (DD +0.6%), Cisco (CSCO -0.6%), and Halliburton (HAL -0.8%).
- Low volatility ETFs: SPLV, USMV, ACWV
Dec. 28, 2013, 8:30 AM
- A tripling of the market over the last five years has made it a difficult environment for value investors looking for ideas, writes Tsachy Mishal; difficult, but not impossible. Mishal has recently put money to work in four new investments:
- Air Products & Chemicals (APD) has a lot more in common with Bill Ackman's successful moves than it does with boners like J.C. Penney and Herbalife, says Mishal. The appointment of a CEO in Q1 should be a catalyst, he says, as the new chief lays out his strategy and Ackman makes public his detailed investment thesis.
- Trading at a steep 20% discount to book value, Annaly Capital (NLY) is the victim of year-end tax-loss selling and the fear of the effect of higher rates on book value, says Mishal. But the year is nearly over, and Annaly management has lowered leverage, hedged its book, and diversified into CMBS - it's well-positioned against further rate increases.
- Eastman Chemical (EMN) has spent the past few quarters paying down debt from an acquisition, says Mishal, but starting in Q1 should begin using its ample cash flow to aggressively buy back stock. Management has an EPS goal of $7 in 2014 and $8 in 2015, and is on the record as saying acquisition targets are too expensive. That leaves share repurchases. Against his long in Eastman, Mishal is short ALB, CE, DD, DOW, and FMC.
- Municipal bond closed-end funds are getting it from both sides - fears of higher rates and credit worries. Throw tax-loss selling into the mix and many are now trading at near-10% discounts to NAV and yielding almost 7% - the taxable equivalent of over 10%. "Municipal bonds offer the best after-tax, risk-adjusted return of any asset class." He's long: NRK, VMO, VKQ, PMO, NAN.
Dec. 17, 2013, 2:08 AM
- Superior Court Judge James Kleinberg has tentatively ordered Sherwin-Williams (SHW), NL Industries (NL) and ConAgra Grocery Products (CAG) to pay $1.1B to replace or contain lead paint in millions of homes in California.
- However, Kleinberg dismissed the claims against two other defendants, BP (BP) unit Atlantic Richfield and DuPont (DD).
- The case was brought by 10 city and county governments in California, which argued that the lead is harmful to children. The substance has been banned in residential paint since 1978.
Nov. 21, 2013, 8:35 AM
- DuPont (DD) agrees to sell its Glass Laminating Solutions/Vinyls business to Kuraray for $543M plus the value of the inventories.
- GLS/Vinyls is a leading supplier of polyvinyl butyral and ionomer sheets for safety glass, and vinyl acetate monomer and polyvinyl alcohol products used in a variety of architectural, automotive and industrial applications; the business delivered 2012 net sales of more than $500M.
- DuPont has been working to move away from lower growth commodity businesses toward higher growth areas, including nutritional products and agriculture.
Nov. 8, 2013, 7:59 AM
- DuPont's (DD) agricultural seed unit of DuPont is teaming with Deere (DE) in a race against rival Monsanto (MON) to provide farmers with enhanced "precision agriculture" analyses aimed at maximizing crop production.
- The programs, which will roll out next year, will give farmers guidance on field management decisions including planting, crop treatment, pest control and even the best time to harvest.
- DuPont Pioneer has long counseled farmers on the best seed to plant for their particular farms, but the deal with Deere is the latest in a series of moves by both DD and rival MON to turn farm-related data analyses into new profit streams by incorporating analytics on an array of data points.
Oct. 25, 2013, 12:19 PM
- DuPont (DD +0.2%) is upgraded to Buy from Neutral with a $70 price target, up from $61, at Citigroup after news of the planned separation of the company's performance chemicals unit.
- The move could unlock value at DD by creating two companies more focused on heir core competencies and more nimble in decision making, the firm believes, and prompt investors to focus on other parts of DD's portfolio, lead to greater transparency at the segment level, and likely drive more accountability at both companies.
Oct. 24, 2013, 5:30 PM| Comment!
Oct. 24, 2013, 4:58 PM
- DuPont (DD) +3.5% AH after announcing plans to spin off its performance chemicals segment into an independent, publicly-traded company 100% owned by DD shareholders.
- The company says the move, which had been sought by Wall Street, will allow it to better focus on the growth area of specialty materials and agriculture.
- The spinoff is expected to dent Q4 EPS by a cent or two.
DD vs. ETF Alternatives
E.I. du Pont de Nemours & Company is a science and engineering company that offers products and patents applications for agriculture, nutrition, electronics and communications, safety and protection, home and construction, transportation and apparel.
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