Is E I Du Pont De Nemours And Co (DD) Destined for Greatness?

E I Du Pont De Nemours And Co (NYSE:DD)’s management blamed its recent underperformance on the Performance Chemical business, which largely constitutes Titanium Dioxide (TiO2) pigment — this paint precursor’s segment has suffered a 56% decline in operating income. My fellow Fool Neha Chamaria notes that the TiO2 market has been plagued by excess inventory lately, which has naturally resulted in a supply glutted price crash. DuPont may now divest that segment to create a “more concentrated” company, which will enable it to concentrate on more profitable businesses, like its Agricultural products. DuPont has also recently sold its Performance Coatings business to Carlyle Group for a price of $5 billion.

DuPont’s Agricultural segment grew 7% in the latest quarter, and now produces just over a third of its total revenues. The company also recently bought an 80% stake in South Africa’s Pannar Seed. This could be bad news for Monsanto Company (NYSE:MON), currently the world’s largest seed company and DuPont’s evident prime competitor after adding up the balance of these major moves.

Chemical-industry peer The Dow Chemical Company (NYSE:DOW) is also trying to expand further into the agriculture market while moving away from the uncertainties of chemical demand. Dow’s Agricultural Sciences division posted 14% sales growth in the first quarter, while it has sold off its non-performing businesses for a total of $8 billion. Everyone needs to eat, but as more companies push harder into this competitive market, the end result is likely to be lower margins for everyone. At least farmers ought to see benefits from this intensified competition.

Putting the pieces together

Today, DuPont has some of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is DuPont Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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