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Diversified chemicals manufacturer and Dow-30 component DuPont (DD Free DuPont Stock Report) has reported second-quarter results. The company posted sales of $9.8 billion, slightly below the year-earlier tally and our $10.4 billion call. Top-line weakness in the Electronics & Communications and Performance Chemicals businesses was partly offset by a somewhat better sales performance at the Agriculture line. Share earnings of $1.28 decreased moderately from the prior-year tally and fell short of our $1.45 estimate. Investors appeared unfazed by the lackluster performance, however, and the stock advanced nicely at first on the release, but the gains moderated thereafter. We think Wall Street was encouraged by earnings that slightly exceeded the consensus expectations and the news that the company is exploring strategic options for its beleaguered Performance Chemicals segment (discussed below).

Sales at the Agriculture business benefited from higher seed prices and greater insecticide and fungicide volumes. However, this was offset by growth in seed input costs, and operating earnings declined modestly. Meanwhile, lower sales volumes in photovoltaic markets hurt performance at the Electronics & Communications line. Elsewhere, operating earnings at the Performance Chemicals business decreased sharply as a result of price declines in the titanium dioxide market. The Performance Materials business posted slightly lower sales and operating earnings, as volume growth in automotive and packaging markets was partly offset by softness in the electronics and industrial markets.

Some weakness may well persist in the near term. As a diversified manufacturer of chemicals, DuPont remains subject to the vagaries of the global economy. In response to its current environment, the company is realigning its leadership team in an effort to improve growth prospects. Moreover, it is exploring strategic alternatives for its Performance Chemicals segment. This may include a spin-off, sale, or other transaction for part or all of this business.

We expect some improvement in the second half of the year, provided that agricultural markets remain healthy and industrial demand improves. Still, we have cut our estimates for full-year 2013 slightly, and now anticipate revenues and share earnings of $36 billion and $3.80, respectively.

The company appears well positioned in its markets and should benefit from global economic growth in the coming years. These high-quality shares earn good marks for Safety and Price Stability, and the company has a high Financial Strength rating. The stock has had a good run since late last year, and this has cut into long-term appreciation potential somewhat. Even so, risk-adjusted total-return potential remains worthwhile, considering the healthy dividend yield. A dollar-cost averaging strategy may be most appropriate for investors seeking exposure to this issue.

About The CompanyDu Pont 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.