Please ensure Javascript is enabled for purposes of website accessibility

DuPont Makes Hay While the Sun Shines

By Alex Dumortier, CFA - Apr 23, 2013 at 10:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Solid numbers from a Dow stalwart.

Investors appear to be waving off growth concerns this week as U.S. stocks claw back some of last week's losses. The S&P 500 (^GSPC 0.01%) and the narrower, price-weighted Dow Jones Industrial Average (^DJI 0.03%) were up 0.67% and 0.78%, respectively, at 10:05 a.m. EDT.

DuPont's got the weather on its side
Chemicals manufacturer DuPont (DD) released its first-quarter results this morning, and the sun shone on its fortunes -- literally. The company recorded operating earnings-per-share of $1.56, beating the consensus estimate of $1.52, thanks to record earnings in the agriculture segment as dry weather encouraged U.S. farmers to buy its new seed and crop protection products. At $10.41 billion, revenue was exactly in line with Wall Street expectations.

Better yet, DuPont reaffirmed its guidance range for full-year 2013 operating earnings of $3.85 to $4.05 per share (unlike Caterpillar, the Dow stalwart that reported yesterday), which would represent an increase of 2% to 7% from the $3.77 per share the company earned in 2012.

The company also announced a 5% dividend increase, which will help support its robust 3.5% dividend yield. In fact, DuPont is a classic example of a blue-chip dividend-payer that has benefited from investor interest in two factors: income and quality. As a result, the shares have massively outperformed the S&P 500 since the market hit its low on March 9, 2009:

DD Total Return Price Chart

DD Total Return Price data by YCharts.

DuPont is an attractive franchise, and I would argue that this year's sale of its cyclical performance-coatings (i.e., paint) business makes it all the more so. For long-term investors, there is no problem in continuing to hold the shares at this level; nevertheless, trading at 13 times the estimate for the next 12 months' EPS, their valuation is toward the top of its recent range. Looking ahead, shareholders should expect adequate, rather than spectacular, returns.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$31,261.90 (0.03%) $8.77
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,901.36 (0.01%) $0.57
E. I. du Pont de Nemours and Company Stock Quote
E. I. du Pont de Nemours and Company

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.