Is DowDuPont a Buy?

DowDuPont (NYSE:DWDP) had been one of the worst performers in the Dow Jones Industrials prior to its Nov. 1 earnings announcement, having fallen 24% year to date and ahead of only IBM among the average’s components. Its third-quarter results, however, helped current investors gain back some of what they’d lost, with shares climbing more than 8% the day of the announcement.

The chemicals giant, formed from the $130 billion merger between Dow Chemical and DuPont in September 2017, reported $0.74 in earnings per share, beating estimates by $0.03, on revenue that, at $20.1 billion, missed expectations by about $100 million. The company, which reported strong demand in its cosmetics, plastics, and paints divisions, also said it intends to repurchase $3 billion in shares over the next five months.

A legacy Dow Chemical manufacturing facility located in Stade, Germany. Image source: Dow DuPont.

DowDuPont is a complex company to follow right now, caught up in a series of mergers and spin-offs that management says will eventually create three more-nimble entities better able to capitalize on growing global demand for its products.

Is now the time for investors to jump in? Here’s a look at where things stand at DowDuPont, to try to determine whether the company is a good buy today.

Addition, then subtraction

Dow and DuPont came together under activist pressure in 2017 with a plan to combine the best of both portfolios and then create three streamlined entities. If all goes according to plan, by June 2019 current shareholders should expect to own shares of three separate publicly traded companies: Corteva Agriscience, the combination’s farm-focused unit; a rechristened Dow, which will house the combined materials-science business; and a new DuPont, which will contain the companies’ specialty-products units.

The ag business is about half crop-protection products and half seeds, with a presence

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