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Here's Why Corteva Stock Jumped on Friday

By Neha Chamaria – Aug 6, 2021 at 5:24PM

Key Points

  • Corteva reported strong sales and income growth in its second quarter.
  • It upgraded its 2021 outlook for the second time this year.
  • Management now intends to repurchase more shares after increasing its dividend last month.

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The agriscience company didn't just deliver strong quarterly numbers but is on track to a solid year.

What happened

Corteva (CTVA 0.80%) stock surged Friday morning and was trading 8% higher as of 3:30 p.m. EDT. The market gave a thumbs up to the agriscience specialist as it trumped Wall Street with its second-quarter numbers, upgraded its full-year guidance for the second straight quarter, and announced a fresh share-repurchase program.

So what

Here are some notable numbers from Corteva's second-quarter report (all changes year over year):

  1. Sales: up 8% to $5.6 billion.
  2. Net income: up 27.6% to $970 million.
  3. GAAP earnings per share: up 36% to $1.37 per share.

Sales from both its seed and crop protection system increased, thanks to strong demand for its Enlist soybean seeds as a result of an increased number of planted acres in North America and sales of new crop protection products. Several of its products won approval in the first half of the year, including Arylex and another herbicide in 12 countries, one fungicide in seven countries, and Pyraxalt insecticide in two countries.

A farmer inspecting a corn crop.

Image source: Getty Images.

Latin America was Corteva's strongest market in Q2 with a 14% jump in sales as the company continued to gain market share in Brazil's second-crop corn -- safrinha. Sales from its largest market, North America, rose 7% year over year.

Encouraged by its Q2 performance, Corteva upped its full-year guidance, which further helped drive the agriculture stock higher today.

Metric Original Guidance for 2021 Revised Guidance for 2021 Actual 2020
Net sales $14.6 billion to $14.8 billion $15.2 billion to $15.4 billion $14.2 billion
Operating earnings per share (EPS)* $1.85 to $1.95 $2 to $2.10  $1.5

*Operating EPS excludes one-time items like amortization and impairment charges .Data source: Corteva financials. Table by author. 

Now what

Corteva's CEO Jim Collins is excited about the company's prospects. During the earnings release, he said, "We remain committed to driving revenue growth and productivity initiatives to deliver substantial margin expansion; and we continue to view 2021 as an important acceleration point on Corteva's path."

While new products should drive sales for the crop protection system, Corteva believes its core Enlist soybean seeds could penetrate 35% of U.S. soybean acres this year.

Corteva's management further gave evidence of its confidence in the company's prospects when it announced a share-buyback program of $1.5 billion alongside its Q2 earnings. This past July, Corteva announced a dividend increase of 7.7% -- its first such increase since its initial public offering (IPO) in 2019, two years after the DowDuPont merger. That should further instill confidence among long-term investors.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Corteva Inc. Stock Quote
Corteva Inc.
$66.33 (0.80%) $0.53

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