Dow now cortiva full#

The stock price could come under some selling pressure. In early July, as DowDuPont investors see this unfamiliar name on their statements, it would not be unusual for them to sell their Corteva shares first and ask questions later. Corteva and its competitors are an integral reason as to why Malthusian theory is not reality. In other words, unless the number of humans is checked by abstinence, disease, famine, war, or other disaster, widespread poverty and degradation inevitably results. Two hundred years ago, Thomas Malthus, an English demographer, economist and cleric said, “the superior power of population cannot be checked without producing misery or vice.”

In the agricultural industry there is currently a “perfect storm” of negativity between the ongoing trade war, destructive soy demand thanks to the African Swine Fever and a terrible spring planting season in the Mid-West due to flooding. These are issues the company has dealt with for nearly a century.Īs a value investor, I like to buy quality businesses when their industry is subject to negative sentiment. The chief risks facing Corteva includes stiff competition, patent expirations, and changes in the regulatory landscape. The balance sheet is conservative with about $2 billion of cash and net debt-to-EBITDA of roughly 2X.

The Company's Board of Directors authorized a three-year, $1 billion share repurchase program this week, representing about 5% of shares outstanding at current prices. The ongoing payout ratio will probably be in the 25-35% range, so the dividend should grow with increases in earnings over the years. All the while keeping their farmer-focused culture.Ĭorteva will pay its first dividend in September which annualizes at $0.52 a share for about a 2% yield. They will use their scale to generate a best-in-class cost structure and continue to emphasize new product launches to grow faster than the overall market. Management is committed to a strong capital allocation discipline with targeted returns-on-invested capital in the 15-18% range versus cost-of-capital of about 8%.

Simply put, consumers and governments are not demanding all farmers become “organic.” As such, crops protected by products derived from biological organisms rather than synthetic chemicals remains a niche market, representing less than 5% of the addressable agricultural market.Īs a business, Corteva has attractive prospects. That said, it must cater to the market it serves so currently, most of its crop protection products are chemicals. Protecting crops from external threats is part of this mandate.Ĭorteva is committed to delivering effective and environmentally friendly formulations and it is a leader in organic solutions.

Dow now cortiva full#

Yes, Corteva is in the crop chemical business but to serve farmers and help feed the world, seeds need to realize their full potential. To say the seed business has high barriers to entry is probably an understatement.Ĭorteva’s crop protection business includes herbicides, insecticides, fungicides and biologicals. Corteva is a top global player with a best-in-class genetics platform that is widely regarded as being impossible to replicate, for all practical purposes. Their patented seeds make crops resistant to damaging insects and significantly improve yields. The seed business is a high-tech one and Corteva spends 11% of its sales on research and development, surpassing all competitors. Roughly 55% of revenues are generate by seeds and the remainder come from crop protection products. The vehicle he created in 1926 to accomplish his goal, the Hi-Bred Corn Company, later morphed into Pioneer-Hi-Bred International which was bought by DuPont in 1999.Ĭorteva is a pure-play agricultural company with two businesses.

Its roots go back to Henry Wallace, a devoted Christian and one-time vice president of the United States, whose self-proclaimed mission was to end starvation and help feed the world. Despite its non-descript name, Corteva is a wonderful business with a storied past.