Markets

DuPont Hits 52-Week Low On Currency Headwinds

Shares of DuPontDD hit a new 52-week low of $47.37 on Sep 18 and eventually closed modestly higher at $47.53.

Year-to-date, DuPont's shares have recorded a negative return of around 30.89%.

Factors to Consider

DuPont's adjusted earnings for second-quarter 2015 missed the Zacks Consensus Estimate. Profit fell year over year on lower earnings in the agriculture business and unfavorable currency swings. Revenues declined by double-digits and missed expectations.

Further, DuPont's agriculture business is faced with industry-wide challenges. Revenues and earnings in this segment are expected to continue to be affected by lower volumes from anticipated reduction in global corn planted area and soft insecticide demand in Latin America. The company sees continued challenges in its agriculture business through the balance of 2015 and expects slower start in the Latin American summer season for seed and crop protection businesses.

The company's significant international exposure makes it vulnerable to fluctuations in currency exchange rates, interest rates and commodity prices. Unfavorable currency swings are expected to affect the company's earnings by 60 cents per share in 2015. DuPont derives more than 60% of its sales from the overseas market so a stronger dollar is expected to considerably weigh on its top line in 2015, especially impacting the agriculture business.

DuPont is also exposed to higher energy and raw material costs, which if not offset fully by the increase in prices, may have a significant impact on its results. Moreover, the company has been focused on several R&D projects. Failure to capture the value of these R&D projects would reduce its earnings growth potential.

The company plans to grow earnings by focusing on developing markets and solutions to meet increasing demand for food productivity, decrease dependency on fossil fuels and protect people, assets and the environment. However, failure to develop and market new products and manage product life cycles could impact the company's competitive position and have an adverse effect on its financial results.

DuPont competes with major global companies that have strong intellectual property estates supporting the use of biotechnology to enhance products, particularly in the agricultural products and production markets. Failure to predict and respond effectively to the competition could cause the company's existing or upcoming products to become less competitive, thereby adversely affecting sales.

DuPont currently carries a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Some better-ranked stocks in the chemical space are Arkema S.A. ARKAY , Air Products & Chemicals Inc. APD and Akzo Nobel N.V. AKZOY . All of the stocks carry a Zacks Rank #2 (Buy).

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DU PONT (EI) DE (DD): Free Stock Analysis Report

AIR PRODS & CHE (APD): Free Stock Analysis Report

ARKEMA-ADR (ARKAY): Free Stock Analysis Report

AKZO NOBEL NV (AKZOY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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