DuPont (DD) Shares Fall After Winning Proxy Fight With Trian Fund

NEW YORK (TheStreet) -- Shares of DuPont (DD) were falling 5.9% to $69.98 on heavy trading volume Wednesday after the shareholders elected all of the chemical company's director nominees to its board of directors.

DuPont said that preliminary results show all 12 of the company's nominees were elected to the board, defeating the directors nominated by billionaire investor Nelson Peltz's Trian Fund Management.

"We are pleased with the outcome of the vote and especially appreciate the strong expressions of support from so many of our shareholders for our strategic transformation and the continued execution of our plan," DuPont Chair and CEO Ellen Kullman said in a statement.

"The vote was close," Trian said in a statement. "We greatly appreciate the support we received from the vast majority of institutional stockholders and mutual funds as well as the leading proxy advisory firms, who all recognize the need for change at DuPont. DuPont's board and management team have staked their reputations on executing the company's current strategy."

About 8.6 million shares of DuPont were traded by 10:04 a.m. Wednesday, above the company's average trading volume of about 5.2 million shares a day.

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, reasonable valuation levels, good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel its 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:

  • The debt-to-equity ratio is somewhat low, currently at 0.81, 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 1.06, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to -$2,123.00 million or 12.30% when compared to the same quarter last year. Despite an increase in cash flow, DU PONT (E I) DE NEMOURS's average is still marginally south of the industry average growth rate of 14.86%.
  • 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: DD Ratings Report
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