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Dow-30 component and diversified chemicals manufacturer DuPont (DD - Free Analyst Report) has reported fourth-quarter results. The company posted sales of roughly $8.4 billion in the term, a 14% year-over-year increase. Higher selling prices more than offset a decline in volumes. The Agriculture segment benefited from strong performance during the Latin American selling season. Demand has remained healthy for the company's seeds and crop protection offerings. Meanwhile, the Performance Chemicals, Performance Coatings, and Safety & Protection units also posted solid top-line gains. The acquisition of Danisco continues to drive results in the Nutrition & Health and Industrial Biosciences divisions. However, sales in the Electronics & Communications business declined, as a result of destocking in photovoltaic end markets and softness in consumer electronics.


December-period earnings of $0.35 a share fell short of the prior-year tally of $0.50, but the figure was still in line with our estimate of $0.34. Despite a solid overall top-line gain, the company experienced rising operating costs and a higher tax rate. Looking forward, bottom-line comparisons may well prove more favorable in the coming quarters. The company has reaffirmed its 2012 share-net guidance of $4.20-$4.40. Our forecast lies at the midpoint of this range, at $4.30. We look for DuPont to post sales of around $41 billion in the current year. The better outlook going forward is likely providing some underpinning for the stock, which was essentially flat following the earnings report.


As a diversified manufacturer of chemicals, the company remains vulnerable to weakness in the broader equity markets. The still-elevated unemployment rate in the United States and the ongoing sovereign-debt crisis in Europe are liable to restrain consumer spending and business investment in developed markets. Thus, our estimates may need to be revisited if the pace of economic activity remains slow and uneven.


Nevertheless, DuPont appears well positioned for the long-haul as it benefits from several important trends in the coming years. An increasing global population and a growing middle income group in developing markets ought to drive demand for food production, alternative energy, environmental solutions, and products that enhance personal safety. Roughly 75% of DuPont's capital and R&D spending is allocated to segments with strong growth prospects.


DuPont stock carries our Highest mark for Safety (1), an above-average Price Stability score, and features a healthy dividend yield. The company also earns our top Financial Strength rating (A++). We expect solid annual top- and bottom-line gains to 2014-2016, and the ranked equity has worthwhile capital appreciation potential to mid-decade.


About The Company: DuPont is engaged in science and technology in a range of disciplines, including high performance materials, electronics, safety and security, and biotechnology. The company operates on a global scale, manufacturing a wide range of products for distribution and sale to many different markets, including automotive, construction, agricultural, medical, protective apparel, electronics and nutrition.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.