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DowDuPont Stock Has Given Muted Performance since Listing

Peter Neil - Author

Nov. 22 2017, Updated 7:35 a.m. ET

DowDuPont’s stock performance

Dow Chemical and DuPont completed their merger on August 31, 2017. The newly merged entity, DowDuPont (DWDP), was listed on September 1, 2017, almost three months ago. As of November 20, 2017, DWDP has risen 5.5%. The stock has underperformed Westlake Chemical (WLK) and LyondellBasell (LYB), which have risen 21.0% and 15.5%, respectively.

On the other hand, DWDP managed to outperform Eastman Chemical (EMN) and the broad-based SPDR S&P 500 ETF (SPY), which have risen 3.1% and 4.2%, respectively, during the same period.

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Driving factors and road ahead

As DWDP continued to consolidate post-merger, investors appeared to be concerned about its future earnings after it made a few divestitures to facilitate the merger. However, DWDP delivered strong 3Q17 earnings with adjusted earnings per share (or EPS) of $0.55, an increase of 10% over the previous year’s proforma adjusted EPS. Revenue was up by 8% to $18.3 billion.

Going forward, the stock’s performance will likely be driven by how fast DWDP can realize cost-saving synergies and its intended spin-offs.

Moving averages and RSI

DWDP’s rise has resulted in the stock trading 0.25% above its 50-day moving average price of $70.68. DWDP’s 14-day relative strength index of 52 indicates that the stock is neither overbought nor oversold. An RSI of 70 and above indicates that the stock has entered overbought territory and can expect possible selling pressure, while an RSI of 30 and below indicates that the stock has moved into oversold territory temporarily and could expect possible buying support at these levels.

In this series, we’ll look at DWDP’s stock performance, long-term debt, ability to service its debt, latest recommendations, and valuations.


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