Good news in Monsanto’s troubles–for DuPont
Shares of E I DuPont (DD) have been in a slow retreat ever since the company announced third quarter earnings before the New York markets opened for trading on October 26. Not because of anything the company reported, in my opinion, but because in the last week or so we’ve moved into a “sell the news” reaction to just about all good earnings reports.
If that continues for a bit (and I’ll try to define “a bit” at the end of this post), I think you’ll get a chance to pick up the shares of a seed company that is taking advantage of troubles at competitor Monsanto (MON) for a very reasonable price.
For the quarter DuPont reported earnings of 40 cents a share, 6 cents a share above the Wall Street consensus. Revenue grew by 14% from the third quarter of 2009 to $7 billion. Wall Street had projected revenue of $6.76 billion.
And going forward DuPont raised guidance for the full year to $3.10 a share. That’s above the $3.04 Wall Street consensus and the range of $2.90 to $3.05 in the company’s previous guidance.
Not bad results, hey? Well, since then the stock has declined gently from $47.70 on October 25 to $46.20 at 1:30 ET on October 27. I think that’s a reflection of a general weakness in the market in the last few days and of some profit taking in DuPont shares that had climbed to a new 52-week high at $48.
What especially interests me in the shares—beyond the company’s expectations for continued strong demand from global markets in its chemicals business—is the gains in market share reported for its seed business. Read more
Update Monsanto (MON)
I think the recent huge price increase from Monsanto (MON) is pretty much like putting a sign on the company’s back saying “Kick me.”
I wonder if hiking seed prices by as much as 42% when much of the developing world is on the edge of a food crisis is really the best strategy to follow to maximize long-term shareholder value.
Monsanto is one of the stocks in the long-term Jubak Picks 50. My policy has always been that readers are adults capable of applying their own individual moral compass to decide what they will and will not buy.
Here’s what Monsanto said on August 13. You decide. Read more
