Dow component and chemical giant DuPont's
But as we've said time and again, earnings and the estimates that come with them can be deceptive. DuPont had a good quarter, particularly in an economy that's hurting competitor Dow Chemical
First, the numbers: The company's sales declined to $5.5 billion in the period, from the year-ago's $5.6 billion. Net income, excluding items, rose to $401 million, from $128 million. Actual earnings per share, excluding items, came in at $0.40, versus $0.12.
Now, yes, that seems like a huge improvement, but here's the catch -- $0.14 of that $0.40 came from tax benefits. Obviously, even without those benefits, DuPont would have improved results substantially over last year. But articles reporting on its earnings, which merely state the company blew by estimates, paint an inaccurate picture of the situation. Earnings don't indicate anything significant about DuPont's ongoing operations.
We don't want to ignore the fact that DuPont is managing well in a difficult economy, thanks to extensive cost-cutting and tight cost controls. Product sales to continued strongholds, such as the housing and automotive sectors, helped keep its third quarter on track. But the company is still vulnerable to future manufacturing weakness and a possible war with Iraq, despite the fact that it's not as affected as Dow Chemical by the high costs of oil and other feed stocks.
All's not ugly at DuPont, but it certainly isn't as rosy as today's headlines would let you believe.