Chemical and industrial products behemoth
E. I. du Pont de Nemours and Company
) is scheduled to report its third-quarter 2012 results before
the market opens on Tuesday, October 23. The Zacks Consensus
Estimate for the quarter is 46 cents per share, representing an
estimated year-over-year decline of 33.5%.
With respect to earnings surprises, the company has surpassed
the Zacks Consensus Estimate in all the trailing four quarters.
This is reflected in the average positive earnings surprise of
Previous Quarter Performance
DuPont reported adjusted earnings of $1.48 per share in the
second quarter of 2012, exceeding the Zacks Consensus Estimate of
$1.46 and the year-ago earnings of $1.37 per share. Growth was
primarily driven by strong performance in agriculture, food and
bioscience businesses, along with the company's advanced
materials business, which witnessed healthy results despite weak
Including one-time items, earnings came in at $1.25 per share
versus $1.29 in the prior-year quarter. The year-over-year drop
reflects lower sales volumes across several segments and weak
demand for titanium dioxide, especially in Europe and Asia.
Net sales grew 7% year over year to $11,006 million, driven by
price hikes and portfolio changes, partially offset by
unfavorable currency impact and lower sales volumes. However,
sales missed the Zacks Consensus Estimate of $11,252 million.
DuPont expects full-year 2012 adjusted earnings to come in at
the lower end of its previous outlook of $4.20 to $4.40 per share
(excluding one-time items), due to macroeconomic and
currency-related uncertainties and a higher tax rate.
Estimate Revisions Trend
Estimates for DuPont show limited movements over the past week.
Over the last 7 days, there has been no upward revision in the
third quarter estimate by any of the 14 analysts covering the
stock. However, two analysts have reduced their forecasts over
the same period. For 2012, none of the 11 analysts revised their
estimates in either direction.
Estimates for the third quarter elicit a comprehensive
downward drift over the past month with 8 analysts lowering their
forecasts while none moving in the opposite direction. Estimates
for 2012 demonstrate a negative bias over the last 30 days with 5
analysts lowering their forecasts while none taking the opposite
Estimate for the third quarter has decreased by a penny over the
last week. Given the directional pressure from a number of
downward revisions, estimate for the quarter has dipped by 8
cents over the past month.
Estimate for fiscal 2012 has not shown any movement over the
last week. Over the last month, estimate for the year has
decreased by 15 cents. The current Zacks Consensus Estimates for
2012 is $3.98, representing a projected year over year increase
DuPont successfully completed the acquisition of Danisco in
May 2012, which led to increased earnings during the second
quarter. The company has adopted aggressive acquisition and joint
venture strategies to facilitate its transformation from an
industrial chemical maker to one that has diversified businesses
ranging from bulletproof vests to solar panel films.
The company is currently pursuing an aggressive cost-cutting
strategy by reducing fixed costs, retrenching employees,
restructuring work schedules and improving working capital
Also, markets for the company's agriculture and food
businesses continue to be strong. However, DuPont faces stiff
The Dow Chemical Company
), in addition to weakness in the housing and construction
markets. Moreover, sluggish economic conditions might prove to be
headwinds for the company.
Higher energy and raw material costs, if not offset fully by
the increase in prices, may have a significant impact on the
company's results. The demand of titanium dioxide, which is used
to give paint and other coatings a white hue, remained weak in
the second quarter of 2012 leading to lower volumes in the
performance chemicals business.
Currently, we have a long-term (more than 6 months) Neutral
recommendation on DuPont. The stock currently holds a Zacks #5
Rank, reflecting a short-term (1 to 3 months) Strong Sell rating.
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