Investment Comparison: Dupont, Monsanto and Dow Chemical
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Let’s look at three companies that compete with each other side by side and determine how they stack up as if we were going to invest in one of the stocks. We are going to look at Dupont (NYSE: DD); Monsanto (NYSE: MON); and Dow Chemical (NYSE: DOW) and compare some key financial ratios against each industry.
Growth
With every business we want to know if they are growing. Why would we put money into a business that is not growing? The best way to understand if a company is growing is to compare it to the industry as a whole. Looking at these three companies, when we look at Sales for the last quarter (year over year) as well as net income here is what we come up with:
Sales Net Income
Dupont 11.9% 4.0%
Monsanto 14.9% 18.6%
Dow (0.1%) (34.7%)
Dow lost ground while the other two increased in revenue and net income, but we have to give the edge to Monsanto here. Its increases were much greater than either of the other two. Edge: Monsanto
Price Ratios: How Valuable is the Stock
We are going to look at four different price ratios and how they compare to each company’s industry average. When we put all three companies side by side here, we want the company ratios to be lower than the industry averages. Monsanto is higher on three out of four metrics while both DD and DOW fair lesser three out of four times. Therefore we will call this one a tie between the two.
Edge: Dupont & Dow Chemical
Financial Conditions
Here we will look at three different ratios, but unlike the price ratios, we want only want the debt/equity lower. The other two ratios we want to be higher than the industry average. When we look at these ratios again, we are looking for the “Current Ratio” and Interest Coverage” to be higher. Monsanto appears to have the edge here also considering it ties on one metric, but comes in below on the debt/equity ratio and higher on interest coverage.
Edge: Monsanto
Investment Intelligence: How smart are they at using their money & assets to make more money?
Here we will look at three key investment return ratios. I want to know how savvy the company is at making money with what they have now. This will give me an indication of how well I think they can do in the future given we do not know what events may occur. We are looking at Returns on (Equity (ROE); Assets (ROA); and Capital (ROC). No company has stellar performance when we look at ROE, but Dupont comes way ahead of the other two as the only one that actually out performs its industry in two of the three categories.
Edge: Dupont
All three stocks have been down through May, following the market. Dupont has a forward dividend yield of 3.4%; Monsanto 1.7%; and Dow Chemical 4.1%. As we look at everything, Dupont might have a slight edge over the other two.
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