E.I. du Pont de Nemours and Company (DD) Valuation

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Company Profile (obtained from Google Finance): E. I. du Pont de Nemours and Company (DuPont) operates a range of products and services for markets, including agriculture and food, building and construction, electronics and communications, general industrial, and transportation. The Company is organized in six segments: Agriculture & Nutrition, Coatings & Color Technologies, Electronic & Communication Technologies, Performance Materials, Safety & Protection and Pharmaceuticals. The Company includes embryonic businesses, such as applied biosciences and nonaligned businesses in Other. The Company had operations in approximately 90 countries worldwide and about 64 % of consolidated net sales are made to customers outside the United States of America during the year ended December 31, 2008. In October 2008, the Company acquired Coastal Training Technologies Corporation. On February 1, 2008, DuPont acquired Chemtura Fluorine Chemicals Business.

ModernGraham Comments: None at this time.

Defensive and Enterprising Investor Tests:

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
6. Moderate PEmg ratio – PEmg is less than 20 – PASS
7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests: Score = 4/5

1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
3. Earnings Stability – positive earnings per share for at least 5 years – PASS
4. Dividend Record – currently pays a dividend – PASS
5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary:

• Last Updated    10/23/2009
• MG Value    $41
• MG Opinion    Fairly Valued
• Value Based on 3% Growth    $35
• Value Based on 0% Growth    $21
• Market Implied Growth Rate    2.61%
• Net Current Asset Value (NCAV)    -$14.57
• PEmg    13.71
• Current Ratio    1.61
• PB Ratio    3.91

Key Data:

Balance Sheet – 9/30/2009

• Current Assets    $15,356,000,000
• Current Liabilities    $9,562,000,000
• Total Debt    $7,545,000,000
• Total Assets    $36,168,000,000
• Intangible Assets    $2,582,000,000
• Goodwill    $2,138,000,000
• Total Liabilities    $28,521,000,000
• Outstanding Shares    903,730,000

Earnings Per Share – Diluted

• 2009 (estimate)    $1.78
• 2008    $2.20
• 2007    $3.22
• 2006    $3.38
• 2005    $2.07
• 2004    $1.76
• 2003    $0.99
• 2002    $1.83
• 2001    $4.15
• 2000    $2.19
• 1999    $0.19

Earnings Per Share – Modern Graham

• 2009 (estimate)    $2.41
• 2008    $2.66
• 2007    $2.69
• 2006    $2.28
• 2005    $1.88
• 2004    $1.92

Valuation History:

• 10/23/09 – Value $41, Actual Price $33.15, Fairly Valued & Enterprising
• 7/12/09 – Value $35, Actual Price $24.61, Undervalued & Enterprising