Will DuPont Earnings Move the Dow?

With dozens of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk decision.

Let's turn to DuPont (NYSE: DD  ) . With its gain of less than 2% ranking among the least impressive performers in the Dow Jones Industrials (DJINDICES: ^DJI  ) in 2012, the chemical company has faced some serious challenges. Can DuPont bounce back? Let's take an early look at what's been happening with DuPont's over the past quarter and what we're likely to see in its quarterly report next Tuesday morning.

Stats on DuPont

Analyst EPS Estimate

$0.07

Change From Year-Ago EPS

(80%)

Revenue Estimate

$7.3 billion

Change From Year-Ago Revenue

(13.4%)

Earnings Beats in Past 4 Quarters

1

Source: Yahoo Finance.

Will DuPont move the markets?
Analysts have been pessimistic about DuPont's fourth-quarter prospects ever since the company missed its third-quarter estimates badly. In the past three months, earnings-per-share estimates have fallen by $0.32, and although the stock has held relatively steady after a big drop follow its late-October earnings release, the stock is still down almost 5% since mid-October.

The problem DuPont has faced lately is a slowdown in international sales. With substantial drops in revenue last quarter from its Asia-Pacific and Europe/Middle East/Africa segments, DuPont had to cut 1,500 jobs in response to the bad conditions.

One particular sore point for DuPont has come from the titanium dioxide market. The chemical, which is used as a pigment for paint, led to record results for DuPont in 2011. But this year, prices fell back, hurting DuPont badly due to its industry-leading exposure to the chemical. Although Huntsman and Kronos Worldwide are major titanium dioxide producers, their total market share barely adds up to match DuPont's, and so DuPont took the biggest hit of the three.

Moreover, DuPont landed in some controversy when a judge found that the company "knowingly perpetrated a fraud against the court" in a patent dispute with Monsanto (NYSE: MON  ) . Given the importance of agricultural products for Monsanto and DuPont, the order hurts DuPont's status in the industry and gives Monsanto a competitive advantage.

With signs that the economic recovery may be accelerating, DuPont's earnings will be a good first indicator of whether a turnaround is in the cards. Still, it may not be evident in DuPont's numbers until next quarter whether the chemical giant is a smart investment.

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  • Report this Comment On January 18, 2013, at 1:54 PM, funfundvierzig wrote:

    "Stalwart stocks like DuPont are great long-term holdings,..."

    WHAT? Double "D" has been a miserable long-term holding for the entire 21st century to date. This much shrunken conglomerate along with its stock has been deflated by the weight of a misfiring and unethical Management. DD last saw 60 on Feb. 3, 2000, nearly 13 years ago.

    ...funfun..

  • Report this Comment On January 18, 2013, at 2:01 PM, funfundvierzig wrote:

    "Moreover, DuPont landed in some controversy when a judge found that the company knowingly perpetrated a fraud against the court' in a patent dispute with Monsanto (NYSE: MON )

    Not only did DuPont's notorious misconduct earn it an adverse jury verdict of $1 billion payable to Monsanto, but also U. S. District Court Judge Richard Wright ruled that DuPont had defrauded investors and the public as well. The Judge's decision is a waving RED FLAG to investors to beware and be wary when it comes to this corrupt chemical conglomerate corrupt to the core!

    We won't even mention DuPont's colossal new product failure and consumer fraud, tree-killing Imprelis, a turf herbicide now mercifully banned by the U. S. EPA

    Merely the opinion of one individual retail investor with long and short positions in DD...funfun..

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