Agricultural commodity price weakness and a strong dollar have created a very challenging for DuPont, resulting in slashing of estimates by analysts and sending the stock to a Zacks Rank #5 (Strong Sell).
About the Company
Delaware-based DuPont (DD) is a global science and technology company with product offerings in Agriculture, Electronics & Communications, Industrial Biosciences, Nutrition & Health, Performance Materials and Safety & Protection.
Earlier this year, the company completed the spinoff of its Performance Chemicals segment.
Disappointing Q3 Results
DuPont reported it Q3 earnings on October 27. While the company beat earnings estimates, its revenues and profits fell sharply mainly due to weak results in its agriculture business, a strong dollar and emerging markets slowdown.
The company reported adjusted earnings of $0.13 per share down from $0.39 per share posted a year ago, but ahead of the Zacks Consensus Estimate of $0.10. Earnings beat was the result of cost savings from the company’s operational redesign actions that added $0.10 a share to its earnings.
Net sales of $4,873 million were down about 17% from the same quarter a year ago, with declines in almost all segments in the quarter. Sales were also short of the Zacks Consensus Estimate of $5,220 million.
Falling Estimates
Due to weak results and outlook, analysts have revised their estimates for the company sharply downwards. Zacks Consensus Estimates for the current and the next fiscal year are $2.78 per share and $3.23 per share respectively, down from $3.21 and $3.52, 60 days ago.
The Bottom Line
While the company has taken a number of steps to cut costs and improve productivity, results will continue to be impacted by foreign exchange headwinds and crop price weakness, in the near term. The company is reported to be exploring deals with other agricultural giants including Syngenta and Dow Chemical as US farm income is expected to fall to its lowest levels in a decade. Record crops in the past three years continue to hurt grain and oilseed prices and challenge agricultural products companies.
Chemical-Diversified industry is currently ranked 179 out of 265 (Bottom 32%) Zacks industries. Further, the stock has Zacks Styles Scores of “F” and “D” respectively for Value and Growth. It is safer for inventors to avoid this stock as of now.
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DU PONT (EI) DE (DD): Free Stock Analysis Report
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