Those expecting to hear the company note high energy prices and slowing global economic indicators got what they wanted. What surely surprised them was the company's statement that its full-year earnings guidance of up to $2.35 a share was unchanged. Income investors are likely rejoicing because their 3.3% dividend is secure for now.
DuPont has had three consecutive quarters of strong sales and earnings growth. Now that the company has credibility in forecasting earnings, it is time for investors to assess whether DuPont's focus on higher-margin businesses is worthy of a premium earnings multiple. DuPont and competitors Bayer
DuPont is finally coming into its own. From 1997 through 2003, earnings per share declined from $3.61 to $1.66. According to Value Line, capital spending (a company's investment in its future) plunged from $4.22 a share to an estimated $1.60. And sales (yes, revenue!) declined from $39.91 to an estimated $27 per share.
The restructured DuPont is producing consecutive quarters of good news and pays a dividend that's much better than average. For investors looking for a diversified company offering growth and dividends, DuPont is shaping up to be a winner. At 17 times earnings, it is not at bargain basement prices, but it is reasonably priced (especially based on the dividend).
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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned - but DuPont is looking very tempting.
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