EI DuPont de Nemours & Co. Earnings: Will Its Transformation Bring Growth?

DuPont has returned to its roots, but will they still produce the growth investors want?

Apr 15, 2014 at 1:30PM

On Thursday, DuPont (NYSE:DD) will release its quarterly report, and shareholders have been pleased about the transformation that the chemical giant has made in its business model. Following the lead of Monsanto (NYSE:MON) in shifting its focus toward agriculture, DuPont hopes to get the same benefits that Monsanto and Dow Chemical (NYSE:DOW) have reaped from divesting slower-growth businesses in favor of the higher growth available from the ag industry.

DuPont has a long history as an industrial chemical giant, having produced plastics, photovoltaic materials, and a wide range of performance chemicals for a vast array of customers. But more recently DuPont has chosen to cast itself more heavily in the agricultural vein, producing seeds, pesticides, and other useful products for farmers to use to boost their crop yields. Investors are excited about the potential of this business, but will it pay off for DuPont as well as it has for Monsanto? Let's take an early look at what's been happening with DuPont over the past quarter and what we're likely to see in its report.

Farm
Source: USDA, Natural Resources Conservation Service.

Stats on DuPont

Analyst EPS Estimate

$1.59

Change From Year-Ago EPS

1.9%

Revenue Estimate

$10.45 billion

Change From Year-Ago Revenue

0.4%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can DuPont earnings keep growing?
Analysts have had deeply mixed views in recent months on DuPont earnings, slashing their first-quarter estimates by 10% but boosting their projections for 2015 full-year earnings by $0.34 per share. The stock has held up well, rising 5% since early January.

DuPont's fourth-quarter earnings report shows some of the pressure that the chemical giant is under to produce stronger growth. Even though the company's earnings per share almost tripled from the year-ago quarter, investors focused instead on tepid growth forecasts for 2014 that suggested revenue could rise by just 4%. Still, DuPont has already correctly identified the problem, with 14% growth from DuPont's ag business showing the greater potential it has compared to slower-growth areas like its performance chemicals segment.

DuPont has made efforts to enhance its value to the farming community. In early February, DuPont announced a deal with DTN/The Progressive Farmer, an information-provider that will let DuPont send precise weather and crop-market data to its customers in order to help them tailor their growing strategies for maximum results. Given that Monsanto did a similar deal late last year, DuPont clearly sees the need to woo customers by providing value-added services.

Yet DuPont and its peers face the ongoing challenge of negative sentiment toward genetically modified organisms. Risk expert Nassim Taleb has recently taken up the mantle of anti-GMO protest, arguing that the threat to the world's ecosystem that GMOs pose outweighs the potential benefits from their use. Taleb is well-known for his emphasis on low probability, high significance events, and given the tendency for GMO traits to spread, the lack of control that DuPont and its peers have over their products introduces risk levels that Taleb and many others are unwilling to take. If enough people get behind anti-GMO moves, it could crush DuPont's new strategy in its infancy.

Moreover, competitive pressures will loom large on DuPont's growth. Monsanto has had a huge head-start in the space and has managed to sign cross-licensing agreements with DuPont and many of their rivals. Like DuPont, Dow Chemical is trying to shift its focus more toward agriculture, but Monsanto's market share is holding both companies back.

In the DuPont earnings report, watch to see how the company's agricultural transition progresses. With all eyes on DuPont's plan to spin off its performance chemicals business to its shareholders, DuPont will become even more dependent on agriculture in the near future -- for good or ill.

3 stocks poised to be multi-baggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Click here to add DuPont to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers