DuPont Worth Considering Now, Driven By Nelson Peltz's Investor Activism
- Nelson Peltz's investor activism can drive DuPont to make changes to improve performance.
- Management at DuPont will try to take the steam out of Peltz's demands by doing some of them as if on their own initiative.
- Investors have an opportunity for attractive share price gains even if Peltz doesn't achieve all of his demands.
- DuPont’s Environmental, Social and Governance (ESG) Disclosure is lower than its top peers.
- However, DuPont's key GHG and water metrics show continuing improvement for the past five years.
- Taken together, DuPont's ESG metrics suggest that the company works to continuously improve operational and process efficiencies in its enterprise.
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.
DuPont: Chemical Companies Under Fire From Activists
- 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.
Tue, Jan. 13, 10:50 AM
- State records show that employees may have been periodically exposed to dangerous fumes for years at Dupont's (DD +0.5%) pesticide plant in Houston where a poisonous gas leak killed four workers in November.
- The Houston Chronicle reports that DuPont informed the Texas Commission on Environmental Quality of exhaust and ventilation system malfunctions at the La Porte plant in 2009 and 2010, but neither the company nor the state regulator alerted the Occupational Health and Safety Administration.
- As much as 600 parts per million of toxic gas methyl mercaptan could have filled a poorly ventilated room in an hour during line-clearing activities, but federal guidelines say workers shouldn't be exposed to more than an average of 10 ppm per day.
- Previously: Chemical leak at DuPont facility kills four (Nov. 16 2014)
Mon, Jan. 12, 2:31 PM
- DuPont (DD +1.5%) agrees to sell its Dupont Theatre and related assets, months after the company was criticized by Trian Fund for retaining its hospitality businesses; financial terms are not disclosed.
- DuPont has long operated several hospitality institutions at its headquarters in Wilmington, Del., including the 12-story Hotel du Pont and the DuPont Country Club.
- In September, Trian highlighted the hospitality businesses as symbolizing waste at DuPont, and corporate governance experts said owning such assets is rare today among big U.S. publicly traded companies.
Fri, Jan. 9, 6:41 PM
- The Peltz proxy fight for DuPont (NYSE:DD) - the third largest proxy fight ever - could be an uphill battle, given how well DuPont stock has performed; during Ellen Kullman’s time as CEO starting in 2009, shares are up 190% vs. 126% for the S&P 500.
- Trian argues it's not enough and does not fix what the activist fund says are DuPont’s more fundamental problems of corporate overhead that burdens the company’s business lines, which would be more competitive if they were split - a strategy Peltz has successfully pushed at other targets including Ingersoll Rand, Cadbury Schweppes and Kraft.
- Critics say the move sends an ominous signal to companies already working to improve operations and set shareholder-friendly courses; they say if activists start targeting strong stocks, it could delay or imperil otherwise sound strategies to improve profits or trim weaker operations.
- But picking a fight might be as much about Peltz as it is about DuPont, sending a signal to his other investments, such as Pepsi (NYSE:PEP), that his patience has limits.
- DuPont says it will review Trian’s board nominees but warns that a proxy battle has “the potential to disrupt our company at a key stage of execution against our plan."
Thu, Jan. 8, 7:06 PM
- Nelson Peltz's Trian Fund launches a proxy fight against DuPont (NYSE:DD) to add four directors to the board, setting up a showdown following 18 months of bickering between the activist investor and the company.
- Trian’s four nominees, which include Peltz himself, likely will be put to a shareholder vote in April unless the parties reach a settlement.
- Trian says the DuPont board "has not held management accountable for continuing underperformance and repeated failures to deliver publicly stated revenue and earnings targets."
- With a $67.5B market cap, DuPont ranks among the biggest-ever targets of a proxy fight by an activist investor.
Dec. 23, 2014, 2:57 PM
- DuPont (DD +1.6%) and Monsanto (MON +0.6%) say they have agreed to settle their long-running technology dispute and dismiss their respective patent infringement lawsuits pending in court.
- The litigation related to claims by MON that DD had infringed certain MON seed chipping patents and claims by DD that MON had infringed certain DD patents related to seed processing.
- Terms of the settlement are not disclosed.
Dec. 19, 2014, 4:33 PM
- S&W Seed (NASDAQ:SANW) agrees to acquire of all of DuPont Pioneer's (NYSE:DD) alfalfa production and research facility assets, as well as all non-GMO alfalfa germplasm, for up to $42M.
- S&W also agrees to be DuPont Pioneer's sole supplier of alfalfa seed through 2024.
- S&W expects the alfalfa business to contribute $26M of incremental annual revenues in FY 2015 and $40M in FY 2016.
Dec. 18, 2014, 4:42 PM
- The spun off business will be named The Chemours Company and - as announced previously - will be led by Mark Vergnano, who is currently EVP in charge of the operation at Dupont (NYSE:DD).
- SEC Form 10 Presentation
- The spin remains on track to be completed by the middle of next year.
- In connection, Dupont will record a pre-tax charge of about $315M in Q4 consisting of $160M in employee separation costs, $140M of asset-related charges, and $15M of contract termination costs. As previously disclosed, the spin is expected to result in at least $1B in savings.
- Source: Press Release
Dec. 17, 2014, 4:57 PM
- A top Chinese government official says the country has approved Syngenta’s (NYSE:SYT) genetically modified Agrisure Viptera corn, one year after China began rejecting shipments of grain it said contained traces of the unapproved trait, according to U.S. Agriculture Secretary Tom Vilsack.
- Chinese Vice Premier Wang Yang said imports of the MIR 162 corn had been approved by China's Ministry of Agriculture, Vilsack says, adding that the ministry also approved imports of biotech soybeans developed by DuPont Pioneer (NYSE:DD) and Bayer CropScience (OTCPK:BAYZF, OTCPK:BAYRY).
- The import approvals do not represent a loosening of China's long regulatory review process for GMO crops, Vilsack says.
Dec. 10, 2014, 9:21 AM
- DuPont (NYSE:DD) and Denki Kagaku Kogyo have signed a definitive agreement to sell DuPont Neoprene polychloroprene to Denka Performance Elastomer, a new joint venture company owned 70% by Denki and 30% by Mitsui (OTCPK:MITSY).
- Neoprene, a synthetic rubber used for many chemical and weather-resistant products such as wet suits and orthopedic braces, was invented by Dupont 83 years ago.
- Dupont's sale comes after a considerable amount of activist investor to break itself up.
Nov. 22, 2014, 8:25 AM
- Harvard Business School's Bill George is troubled by the trend of activist investors shifting their wrath to some of America’s best companies, which he says may net nice profits in the short term but places the competitiveness of America’s great global companies at risk.
- An example is Amgen (NASDAQ:AMGN), whose stock has gained 185% in the past five years, but Dan Loeb still wants to split the company; George says this would destroy a productive innovator by taking away the cash it needs to develop new drugs and fuel growth.
- PepsiCo’s (NYSE:PEP) 52% increase in three years is double that of Coca-Cola, yet Nelson Peltz is agitating to split the company in two, as he did with Kraft - which has struggled, as has its Mondelez spinout.
- Peltz also is trying to break up DuPont (NYSE:DD) even though the stock has climbed 250% since Ellen Kullman became CEO in 2009; a disjointed conglomerate without a clear strategy, DuPont's stock had slipped 62% since 2000.
- Bill Ackman successfully partnered to put Allergan (NYSE:AGN) in play, which resulted in a sale, but George says the deal was unnecessary for a stock that had gained 2,400% since David E.I. Pyott became CEO in 1998.
- In each case, George says leaders were forced to focus on saving their companies instead of winning global competitive battles, creating great products and building new businesses.
Nov. 16, 2014, 5:44 AM
- Four workers died and a fifth was hospitalized on Saturday due to a chemical leak at a DuPont (NYSE:DD) plant near Houston.
- The chemical, methyl mercaptan, is a liquid when contained, but becomes a gas when it is released and mixes with oxygen.
- "Our focus at the moment is solely on the employees and the family members," says spokesman Aaron Woods. "But as we move past that we will begin a full investigation to understand what went wrong and what we need to do to prevent this from ever happening again."
Oct. 29, 2014, 2:48 PM
- Bayer (OTCPK:BAYZF, OTCPK:BAYRY) says its crop science unit agrees to acquire certain crop protection and land-management assets from DuPont (DD -1.7%) for an unspecified amount.
- The deal will enable Bayer to offer a broad range of products for weed control for farming, and will provide access to the growing forestry and range and pasture business segments in North America.
- DuPont will continue to sell its land management products outside of the five countries where the assets are located: the U.S., Canada, Mexico, Australia and New Zealand.
Oct. 28, 2014, 2:39 PM
- DuPont (DD +0.3%) CEO Ellen Kullman defends the company's diverse portfolio of businesses, pointing out the "competitive advantages" in developing seeds for farmers, plastics for car makers and a host of other products.
- "There is a lot of power in being able to deliver greater capability to [customers] than in being very narrow," Kullman says in her first public comments on the campaign by activist investor Nelson Peltz to break the company in two.
- "Our current capital structure provides us with important financial flexibility we need to pursue strategic growth opportunities in light of regional and highly seasonal agricultural cash flows," the CEO said in the company's earnings conference call.
- Kullman also says DuPont and Peltz are aligned in focusing on cutting costs, citing $2B in expense reductions during the past five years with plans to cut another $1B by 2020.
- Earlier: More on DuPont's Q3 results
Oct. 28, 2014, 7:09 AM
- Net income of $433M vs. $285M in the same quarter a year ago. Operating earnings per share of $0.54 vs. $0.45 per share last year.
- Operating earnings by segment: Agriculture +11%; Electronics & Communications -3%; Industrial Biosciences +4%; Nutrition & Health +23%; Performance Chemicals -5%; Performance Materials +1%; Safety & Protection +18%; Other +22%.
- The company backed its full-year operating earnings outlook of $4.00-$4.10 per share and expects its Q4 operating EPS to grow about 20% from $0.59 per share in the year-earlier period.
- Q3 results
Oct. 28, 2014, 6:01 AM| 2 Comments
Oct. 27, 2014, 5:30 PM
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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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