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On Tuesday, July 27, E.I. du Pont de Nemours & Company (DD) reported a blowout quarterly earnings report. The company earned $1.159 billion, or $1.26 per share, compared to $417 million, or $0.46 per share, in the year ago period. On an adjusted basis, net income attributable to the company was $1.1 billion or $1.17 per share, versus $558 million or $0.61 per share, in last year's corresponding quarter. This compared to Wall Street estimates of $0.93 per share. It was a tremendous beat and highlighted the company's earnings momentum.Quarterly net sales surged 26% to $8.62 billion compared to $6.86 billion in the second quarter of 2009. This came in well ahead of analysts' expectations of $8.23 billion. Furthermore, emerging market sales increased 32% in the quarter and the company said that all segments had double-digit sales increases.
DuPont also raised its forward-looking guidance. The company now expects fiscal 2010 adjusted earnings per share in a range between $2.90 and $3.05. This is well ahead of current Wall Street earnings estimates which are pegged at $2.64.
DuPont's management also reiterated its commitment to deliver about 20% compounded annual earnings growth in the 2009-2012 period. It also expects to grow its top-line revenues at about 10% per year. Needless to say, these are some very impressive growth projections.
The growth prospects of DD are all the more impressive because the stock also offers a tremendous 4.04% dividend yield and trades at a very reasonable valuation. DuPont's yield should provide investors a margin of safety during a market correction. The stock trades at a P/E of 15.54, a forward P/E of 13.80 and a PEG ratio of 2.48.
Considering the high-quality nature of the company, the growth markets it serves, as well as DD's long history of paying dividends, the stock's P/E ratio suggests that DuPont's valuation is very reasonable - maybe even cheap. The chart also looks strong in the near term.
Year-to-date, DD has significantly outperformed the market, gaining 20.67%. In the last month alone, the stock has climbed over 12%.
The current market environment is giving long term investors the opportunity to buy very high quality businesses at attractive, if not dirt cheap prices. After Tuesday's quarterly earnings results, few companies look better than DuPont.
Jason Raznick is the business editor at Benzinga.com
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Reader Comments (Page 1 of 1)
7-29-2010 @ 8:13AM
Clay Gunter said...
Dupont, the original criminal that over the years brought us to this economic disaster! They found that if they layed off about 3500 people, their stock value went up! They've never looked back and by doing so greedily traded Americans jobs for a few points on the stock market! BigBiz greed in America and it's destructive force has come full circle now as the people are enslaved to BigBiz and it's twisted logic!