DuPont Earnings Preview: First Quarter 2009

DuPont [[DD]] is scheduled to report their first quarter 2009 results before the market opens on Tuesday, April 21. Based on our analysis, we at are expecting DD to report mixed results that disappoint Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $7.61 billion and EPS of $.52. This would represent an 11% decline in revenues from last year’s $8.57 billion in the same period. The current analyst consensus estimates calls for revenues of $7.74 billion and $.52 EPS. On January 27, the company provided first quarter 2009 EPS guidance of $.50 – $.70.


While we believe it is likely that DuPont will meet Wall Street’s already greatly reduced EPS estimates, we think that they may disappoint on the top line. The company’s Agriculture & Nutrition segment continues to perform well, but the other segments continue to feel the impact of the current global recession.


We are also cautious about the company’s prospects to capitalize on an economic recovery. When the economy begins to turn, we expect that the recovery will begin in the U.S. and then the other global markets will follow. We believe this is a negative for DuPont, which receives over two-thirds of their revenues from outside the U.S.


Share Performance

DuPont’s shares are up over 8% since the beginning of the year – making them one of only six Dow component stocks to post gains in 2009. Last year, DuPont shares declined almost 43% as the stock underperformed the 34% drop in the Dow Jones index.



Shares are now trading at 12x consensus 2010 EPS estimates. This is a premium to the relative valuations of their peer group. DuPont has participated heavily in the recent market rally, but we expect the stock to give back some of those gains in the coming months.


Recommendation: Sell with a $20 price target.


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