CTVA

Corteva Inc

Industrial/Transportation


Presented:04/08/2020
Price:$26.05
Cap:$19.52B
Current Price:$57.30
Cap:$39.67B

Presented

Date04/08/2020
Price$26.05
Market Cap$19.52B
Ent Value$20.91B
P/E RatioN/A
Book Value$32.47
Div Yield1.5%
Shares O/S749.28M
Ave Daily Vol5,780,204
Short Int1.13%

Current

Price$57.30
Market Cap$39.67B
Corteva, Inc. is a holding company, which engages in the provision of agricultural products. It operates through the Seed and Crop Protection segments. The Seed segment develops and supplies germplasm and traits that produce optimum yield for farms. The Crop Protection segment serves the global agricultural input industry with products that protect against weeds, insects and other pests, and disease, and that improve overall crop health both above and below ground via nitrogen management and seed-applied technologies. Its services include pasture and land management, and pest management. The company was founded on March 16, 2018 and is headquartered in Wilmington, DE.

Publicly traded companies mentioned herein: Bayer AG (BAYN GR), Chemours Co/The (CC), Corteva Inc (CTVA), Dow Inc (DOW), DuPont de Nemours Inc (DD), FMC Corp (FMC)

Highlights

The presenter is long Corteva (CTVA) as he believes the stock is a defensive play that could double in price over the next three years. He considers the company to be trading at a trough valuation in a trough industry environment and highlights its net cash balance sheet as a positive. The company operates two business segments, seed and crop protection, which account for a nearly even split looking at the revenue mix in FY’19, with approximately 55% and 45% derived from seed and crop protection, respectively. Corteva was created by the merger and subsequent spin-off of the agricultural units of DOW and DD completed in June 2019. The presenter’s base case price target for 2023 is $46, which equates to $35 when discounted back to the present (the same value produced by the presenter’s DCF model). His base case assumes a 10x EV/EBITDA multiple on a 2023 EBITDA figure of $3B. The presenter also noted that his EBITDA growth rate assumptions are lower than management’s guidance, which is in the mid-teens. All this equates to a 2023 EPS of ~$2.61 based on the presenter’s estimates.

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Idea Discussion

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