E I Du Pont De Nemours And Co (DD), The Dow Chemical Company (DOW), FMC Corp (FMC): A Paradigm Shift From Chemicals to Agriculture

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Analyzing Ratios:

Indicators DuPont Dow Chemical Co. FMC Corporation
Price/Earnings TTM

22.0 41.5 19.3
Price/Book

4.4 2.4 6.0
Revenue Growth

(3 Yr. average)

8.9 8.2 9.9
Net Income Growth

(3 Yr. average)

16.7 22.2 22.1
Return on Equity

42.7 5.4 32.0
Dividend Yield

3.03% 3.72% 0.78%
Current Price

$57.59 $34.99 $63.65

Data from Morningstar on 26th July 2013.

Upon analyzing the key ratios we notice the low dividend yield FMC provides despite being highly priced among its competitors, the company has been cutting back on its dividends to fuel its acquisitions. On the other hand DuPont with a low 35 % payout ratio has the ability to increase its dividends, on contrary Dow Chemical has a strikingly high payout ratio of 156%, indicative of an unsustainable condition and slow growth.

E I Du Pont De Nemours And Co (NYSE:DD) lags behind its rivals in terms of net income growth, since the chemical business has been pulling down margins for quite some time now. However, DuPont provides the highest return on equity, while The Dow Chemical Company (NYSE:DOW) struggles with its ROE.

Final Thoughts:

All the three companies in question are aggressively diversifying into agriculture; however E I Du Pont De Nemours And Co (NYSE:DD) and Dow Chemical, due to the size of their operations. are in a much better position than FMC Corp (NYSE:FMC). DuPont intends to focus on growth markets such as agriculture and biosciences, which it deems more profitable. Like its biggest competitors Dow has also diversified into agricultural products, far beyond its pure chemical business, however it only defines a minor portion of its business. The company remains more exposed to market conditions in the chemical sector, marked with lower demand cycles.

E I Du Pont De Nemours And Co (NYSE:DD) on the hand has certain products in its pipeline which are gaining traction in the market. For instance, in its industrial bioscience division new enzyme launches in laundry detergents paints new opportunities for the company. With all these companies present in the agriculture sector, DuPont due to early entry has an advantage over the two of its rivals. In the light of the above mentioned, DuPont might be a better option.

The article A Paradigm Shift From Chemicals to Agriculture originally appeared on Fool.com and is written by Zain Raza.

Zain Raza has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Zain is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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