DWDP Stock - Is DowDuPont's Stock a Good Buy - Investment Ideas | Summary and Q&A

TL;DR

DowDuPont is in the process of breaking up the company into three separate businesses, and this analysis explores the potential value of each segment and whether it is worth adding to investment portfolios.

Key Insights

• 👨‍💼 DowDuPont's reorganization involves spinning off its agriculture, materials, and specialty products businesses into separate entities.
• 💪 The agriculture segment's quarterly revenue fluctuates seasonally, with historical Q1 being the strongest, while Q3 2018 showed a weaker performance.
• 👨‍💼 The materials business, expected to have EBITDA margins of 23-24%, is projected to generate over $50 billion in revenue and pay out 45% of net income as dividends.
• 🥳 Analysts suggest using a sum of the parts valuation method to determine the value of each segment, resulting in estimated enterprise values of $39 billion for agriculture, $80 billion for materials, and $86 billion for specialty products.
• 🧚 The current market price of DowDuPont stock appears undervalued compared to the calculated fair value, presenting a potential investment opportunity.

Transcript

hey YouTube I'm Jimmy in this video I'm gonna walk through my analysis of Dow DuPont ticker symbol DWDP well that's the ticker for now they're actually in the middle of breaking up the company but we'll come back to that in a second this is the tenth video in a series where we're analyzing all 30 stocks in the Dow Jones Industrial Average we're the... Read More

Questions & Answers

Q: What are the three businesses that DowDuPont will be splitting into?

DowDuPont will create Corteva Agriscience for its agriculture business, keep the Dow name for its materials business, and retain the DuPont name for its specialty products business.

Q: What is the recommended valuation method for DowDuPont?

The sum of the parts valuation method is suggested, which involves valuing each segment as if it were a standalone company and adding up the values to determine the overall value of the business.

Q: Are there competitors that can be used for valuation comparisons?

Monsanto (now part of Bayer) and FMC are potential peers for the agriculture segment, while CE, LYB, 3M, Honeywell, and Versum Materials can be considered for the materials and specialty products segments.

Q: Why is the stock price of DowDuPont trading at a lower value than the calculated fair value?

The market may be uncertain due to the lack of clarity from the company regarding the allocation of debt and cash among the three spin-off businesses, resulting in a lower stock price.

Summary & Key Takeaways

• DowDuPont is undergoing a reorganization, with plans to spin off its agriculture business as Corteva Agriscience, the materials business as Dow, and the specialty products business as DuPont.

• Investors have three choices: walk away, buy DWDP stock before the spin-off to own a portion of all three companies, or wait until the spin-off is complete and analyze the individual companies.

• Using a sum of the parts valuation method, analysts calculate the potential value of each segment: agriculture at $39 billion, materials at $80 billion, and specialty products at $86 billion.