Chemical and industrial products behemoth
E. I. du Pont de Nemours and Company
) second-quarter 2012 adjusted earnings beat estimate but its
profit (as reported) fell 3% on higher costs. The company expects
earnings in 2012 to be at the low end of its forecast due to global
Second Quarter Flashback
The company 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.
The company saw strong performance in agriculture, food and
bioscience businesses, along with its advanced materials business,
which witnessed healthy results despite weak European markets.
Including one-time items (such as costs associated with the
Danisco acquisition and customer claims and litigation charges),
earnings came in at $1.25 per share versus $1.29 in the prior-year
quarter. The drop reflects lower sales volumes across several
segments and weak demand for titanium dioxide, especially in Europe
Net sales grew 7% year over year to $11,006 million, driven by
price hikes and portfolio changes, partly offset by unfavorable
currency impact and lower sales volumes. However, sales missed the
Zacks Consensus Estimate of $11,252 million.
We have discussed the quarterly results at length here:
DuPont EPS Beats, Outlook Cautious
Agreement - Estimate Revisions
Estimates for DuPont have showed a downward trend over the past
week. Out of 13 analysts covering the stock, 8 have lowered their
earnings estimates for the third quarter over the past 7 days while
3 moved in the opposite direction. An identical trend applies to
the estimates for 2012, with 9 analysts (out of 14) downwardly
revising their forecasts while 4 raising the same.
Estimate for the third quarter demonstrate a strong negative
bias over the last 30 days with 10 analysts lowering their
forecasts and only 1 increasing the same. For 2012, estimates are
negatively inclined over the past month with 11 analysts lowering
their forecasts while 2 making positive revisions.
Magnitude - Consensus Estimate Trend
Given the downward revisions, estimate for the third quarter and
2012 dropped by 7 cents and 5 cents, respectively, over the past
week. The decline has been more pronounced over the last month with
estimate for the third quarter and 2012 decreasing 8 cents and 9
cents, respectively. The current Zacks Consensus Estimates for the
third quarter and 2012 are 63 cents and $4.22,
Neutral on DuPont
DuPont is a global chemical and life sciences company, with a
diverse array of product offerings. 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
DuPont, through its wholly-owned subsidiary DuPont Denmark
Holding ApS, successfully completed its acquisition of Danisco in
May 2011. The acquisition strengthens the company's presence in the
food ingredient and enzyme markets, while expanding its presence in
industrial biotechnology and biofuels. The acquisition contributed
5% to the company's sales in the second quarter of 2012.
The company is focused on an aggressive cost-cutting strategy by
reducing fixed costs, retrenching employees, restructuring work
schedules and improving working capital productivity. It remains
on-track to exceed its three-year (2010-2012) fixed cost
productivity targets of $1 billion by 2012. Moreover, DuPont's
valuable and meaningful product differentiation enables it to serve
its end-markets better.
However, higher raw material costs are a concern for DuPont. 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. The
sluggish economic conditions also might prove to be headwinds for
the company going forward.
Currently, we have a long-term (more than 6 months) Neutral
recommendation on DuPont. The company, which competes with
The Dow Chemical Company
), currently holds a short-term Zacks #3 Rank (Hold).
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at
BASF SE (BASFY): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
DOW CHEMICAL (DOW): Free Stock Analysis Report
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