Chemical and agriculture giant DuPont (NYSE: DD) is reaping a bountiful harvest, with Q3 results that beat analysts' expectations. In response, the market yawned, with shares dropping throughout the morning following the report. Wall Street may be less concerned about DuPont's performance this year as it is about the fate of the company's impending merger with Dow Chemical (NYSE: DOW) next year. 

Still, this quarter's numbers should cheer current investors, who are seeing the company's cost-cutting moves pay off in the form of higher operating profits. Let's check out the company's overall performance.

The third quarter was a mixed bag for DuPont's agriculture segment, but the company still beat expectations. Image source: Getty Images.

DuPont: The raw numbers

MetricQ3 2016 ActualQ3 2015 ActualGrowth (YOY)
Net sales $4.91 billion $4.87 billion 1%
GAAP EPS $0.01 $0.14 (93%)

Operating EPS

$0.34 $0.13 162%
Operating costs $1.7 billion $1.4 billion (14%)

Data source: E.I. DuPont de Nemours. Chart by author. YOY = year over year. 

What happened this quarter

DuPont posted operating earnings of $0.34 per share, handily beating analysts' consensus estimate of $0.21. Net sales of $4.91 billion also beat analysts' estimates of $4.87 billion, albeit barely. The company returned cash to its shareholders during the quarter, in the form of $416 million in share repurchases and the company's 449th consecutive quarterly dividend. 

For most of the company's businesses, the story was the same: Cost savings and higher volumes combined to grow earnings -- or, in the case of the agriculture division, reduce losses. Volumes grew in five of the company's six reportable segments, for 3% overall volume growth and companywide gross margin growth of 45 basis points. Even in the electronics and communications segment, the lone segment reporting lower volumes, earnings grew as cost savings outweighed weaker demand for consumer electronics and the company's Tedlar film. 

The agriculture division, the company's largest, was a mixed bag. Lower local prices for the company's products were coupled with increased product costs, even as the division saw overall cost savings and higher volumes. Seed volumes and prices increased overall, and the company's new Leptra corn hybrids continue to sell well. A bright spot was the critical Brazilian market, which saw a strong start to its summer growing season. However, both fungicide and insecticide volumes and prices were down. 

Management's take

CEO Ed Breen was pleased with the company's performance and success at cutting costs in the third quarter:

This quarter we continued the strong momentum from the first half of the year. We increased segment operating earnings 40%, expanded operating margins in each reportable segment, reduced costs, grew volumes, and improved free cash flow. As a result of our continued performance and progress against strategic initiatives, we are raising our operating earnings guidance for the year.

But Breen was also looking ahead to the company's future with Dow:

We also are making progress preparing for the merger with Dow. ... [W]e have finalized plans to realize our cost synergies. We continue to work constructively with regulators in key jurisdictions to close the merger as soon as possible.

Looking forward

DuPont is anticipating a strong year overall. The company increased its full-year operating earnings outlook to $3.25 per share, up from a forecast of $3.15-$3.20 per share. It also anticipates GAAP earnings to be $2.71 per share for the year, a 30% year-over-year increase.

That said, the company is also predicting some weakness in the fourth quarter. In the company's agriculture division, fourth-quarter sales are expected to fall slightly. The company also expects weak commodity prices to continue for at least the rest of the year. 

Beyond 2016, though, the company's future hinges on its being able to successfully execute its planned merger and split with Dow, which the company now expects will happen very soon. "In the event that regulators in those jurisdictions use their full allotted time, closing would be expected to occur in the first quarter of 2017," Breen said.

However, despite his confidence, many observers have concerns that those same regulators will quash the proposed merger. Regulators have killed several high-profile mergers and acquisitions this year already, and Reuters recently reported that in another proposed agricultural deal, ChemChina is willing to offer additional concessions to acquire Syngenta. If everything goes according to plan, DuPont expects the combined company to then split into their respective industries, as both parties have indicated, to occur about 18 months after the merger is completed.

Ultimately, while DuPont is looking strong, if the merger goes south, the company's stock price and careful plans will go with it. Wise investors should think carefully before they risk jumping in now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.