E.I. du Pont de Nemours & Company (NYSE:DD)
CAPS Rating:
Manufactures a range of products for distribution and sale to many different markets, including the transportation, safety and protection, motor vehicle, home furnishings, medical, electronics, communications and the nutrition and health markets.
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du Pont is an instantly recognizable company that has both a storied history and a bright future ahead of it. But the question is, is the current situation conducive to investment and will the valuation drain returns? On the insider front, I find one encouraging sign, purchasing by management, but also one that is less positive. The options activity is unbelievable at du Pont, ~ 22 awards in the last month to over 10 officers. Compare that to 3M (5 awards) and GE (0 awards) over three months and the contrast is stark. This appears to hold up long term as well. Options do not necessarily correlate long term growth with compensation and so this is concerning to me. A 14.3 P/E is a little high, though a 49.3B market cap has room to grow. A 1.5 debt to equity is concerning, especially with an increase of 5B since 2007. The dividend is 3.11%, which is nice, and the company has been beating earnings estimates, but the executive compensation, relatively high valuation, and heavy debt load lead me to an underperform rating.