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How DuPont's Earnings Will Look Tomorrow

By Dan Caplinger - Apr 22, 2013 at 12:33PM

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The chemical giant seeks to get back to its winning ways.

On Tuesday, DuPont (DD) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever surprises inevitably arise. That way, you'll be less likely to have an uninformed, knee-jerk reaction that turns out to be exactly the wrong move.

As the chemical-industry representative in the Dow Jones Industrials (^DJI 1.76%), DuPont makes a wide variety of products for businesses including agriculture, electronics, plastics, and pharmaceuticals. But given the overall global economic weakness, can the company keep producing the results investors want to see? 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 quarterly report.

Stats on DuPont

Analyst EPS Estimate

$1.52

Change From Year-Ago EPS

0.7%

Revenue Estimate

$10.41 billion

Change From Year-Ago Revenue

(7.3%)

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will DuPont ramp up earnings this quarter?
Analysts have had mixed feelings about DuPont's earnings in recent months. They've cut their consensus estimates on earnings for the just-ended quarter by $0.04 per share, but they've boosted their full-year 2013 earnings-per-share figures by a nickel. The stock has responded with modest optimism, rising about 7% since mid-January.

DuPont has increasingly focused on the lucrative agriculture and farm products arena. With a variety of engineered seeds, fertilizers, and herbicides, DuPont has pushed forward in developing technology to help protect crops from threats like disease and changing weather conditions, such as last year's drought. The company has seen strong growth in the ag segment, and it expects double-digit sales growth in agriculture through 2013.

As part of its refocusing, DuPont made a big move to streamline its business during the quarter, finally closing on its $4.9 billion deal to sell its car paint division to private-equity firm Carlyle Group (CG). Carlyle arguably got a good deal, given the relatively low price, and it has a opportunity to whip the division back into shape. But the move should help DuPont improve its margins and reduce its exposure to Europe, whose economic woes have been holding the company back recently.

Another important move DuPont made recently was settling a lawsuit with rival Monsanto (MON), with DuPont agreeing to pay more than $1.75 billion over the next 10 years in order to secure licensing rights for various products. In exchange, the two competitors agreed to dismiss their respective claims against each other, resolving what could have been a long and ugly dispute.

In DuPont's report, be sure to watch closely at where the company is seeing the best growth prospects. If core businesses like its titanium dioxide production start to pick up in light of the housing recovery, then DuPont may move back from its ag focus to become more of a conglomerate again.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,212.96 (1.76%) $575.77
Monsanto Company Stock Quote
Monsanto Company
MON
E. I. du Pont de Nemours and Company Stock Quote
E. I. du Pont de Nemours and Company
DD
Carlyle Group L.P. Stock Quote
Carlyle Group L.P.
CG

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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