DuPont recently lowered its profit outlook for the year and plans to accelerate cost cutting.
With Kullman stepping down as CEO, will DuPont's stock be a good investment going forward?
Here is the recommendation, according to TheStreet Ratings, TheStreet's proprietary ratings tool.
TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
When you're done, be sure to read about these top-rated dividend stocks to buy. Year-to-date returns are based on October 5, 2015 closing prices.
E. I. du Pont de Nemours and Company
Rating: Buy, B-
Market Cap: $46.4 billion
Year-to-date return: -30.65%
E. I. du Pont de Nemours and Companyoperates as a science and technology based company worldwide. The company's Agriculture segment offers corn hybrid, soybean, canola, sunflower, sorghum, inoculants, seed products, wheat, rice, herbicides, fungicides, and insecticides.
TheStreet Ratings team rates DU PONT (E I) DE NEMOURS as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate DU PONT (E I) DE NEMOURS (DD) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.94, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, DD has a quick ratio of 1.56, which demonstrates the ability of the company to cover short-term liquidity needs.
- 41.07% 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 10.89% trails the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared 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 exceeded that of the S&P 500.
- DD, with its decline in revenue, slightly underperformed the industry average of 11.3%. Since the same quarter one year prior, revenues fell by 11.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: DD