DuPont (DD) Stock Gains on Business Consolidations
NEW YORK (TheStreet) -- DuPont (DD) - Get Report stock is increasing 0.88% to $63.96 in early afternoon trading after the science and technology company announced two consolidations within its units to increase growth and efficiency.
The packaging and industrial polymers business will be consolidated with the performance polymers unit and fall under the performance materials reporting segment.
The protection technologies business will be merged with the building innovations unit to create the protection solutions division, falling under the safety and protection reporting segment.
"This will lead to more effective deployment of capital in these businesses, while capturing savings in our cost structure and driving greater value for our shareholders," interim CEO Edward D. Breen said in a statement.
Breen promised to look into the company's cost structure to seek better returns for shareholders when he became interim CEO in October.
Both consolidations will be effective on January 1.
TheStreet Ratings team rates DU PONT (E I) DE NEMOURS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate DU PONT (E I) DE NEMOURS (DD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.90, 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 1.24, which illustrates the ability to avoid short-term cash problems.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, DU PONT (E I) DE NEMOURS has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- 38.33% is the gross profit margin for DU PONT (E I) DE NEMOURS which we consider to be strong. Regardless of DD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.79% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Chemicals industry. The net income has significantly decreased by 45.7% when compared to the same quarter one year ago, falling from $433.00 million to $235.00 million.
- Net operating cash flow has decreased to $200.00 million or 25.65% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: DD