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Why Du Pont (DD) Stock Continues To Fall On Friday

NEW YORK (TheStreet) -- Shares of E I Du Pont De Nemours and Co. (DD) are down -3.84% to $65.10 in heavy trading volume this afternoon as the stock continues to fall following the company's announcement that it cut its outlook for the second quarter and full year 2014.

Du Pont, an agriculture and chemical company, said operating earnings for the 2014 second quarter will be "moderately below" the EPS of $1.28 it earned during the 2013 second quarter, compared to analyst estimated EPS of $1.46, according to a FactSet poll.

The company lowered its operating earnings guidance for the 2014 full year to between $4.00 and $4.10 per share, compared to analyst expectations of $4.28 per share.

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Separately, TheStreet Ratings team rates DU PONT (E I) DE NEMOURS as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DU PONT (E I) DE NEMOURS (DD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, solid stock price performance, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.05% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The debt-to-equity ratio is somewhat low, currently at 0.69, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.07, which illustrates the ability to avoid short-term cash problems.
  • DU PONT (E I) DE NEMOURS's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, DU PONT (E I) DE NEMOURS increased its bottom line by earning $3.04 versus $2.58 in the prior year. This year, the market expects an improvement in earnings ($4.31 versus $3.04).
  • 37.60% is the gross profit margin for DU PONT (E I) DE NEMOURS which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.15% trails the industry average.
  • You can view the full analysis from the report here: DD Ratings Report
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