NEW YORK (TheStreet) -- Shares of E I Du Pont De Nemours (DD) are up 3.31% to $68.01 in pre-market trade as activist investor Trian Fund Management LP launched a campaign to force the company to break itself up after the chemical firm rebuffed its repeated private calls for change, the Wall Street Journal reports.
Trian plans to seek support from other investors for its push to dismantle the company, according to a letter it sent DuPont's board Tuesday that was reviewed by the Journal. Trian said it plans to release the letter widely after more than a year of unsuccessful private efforts to persuade.
Trian has a $1.6 billion DuPont stake, according to the letter, which would make it a top-10 holder in the Delaware company with nearly 3% of the stock, according to recent disclosures. Trian first invested more than $1 billion in DuPont in early 2013, and it added to its position recently when the stock fell after the company cut its earnings guidance.
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 increase in net income, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Chemicals industry average. The net income increased by 3.9% when compared to the same quarter one year prior, going from $1,030.00 million to $1,070.00 million.
- 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 1.20, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 872.22% to $350.00 million when compared to the same quarter last year. In addition, DU PONT (E I) DE NEMOURS has also vastly surpassed the industry average cash flow growth rate of -14.28%.
- 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 ($4.02 versus $3.04).
- You can view the full analysis from the report here: DD Ratings Report