Omnova Solutions Inc.

Company Description

Omnova provides polymers, chemicals, and decorative/functional surfaces for commercial, industrial, and residential uses. Its products are used in a wide array of applications including, but not limited to, upholstery, wall covering, laminates, and textiles. The company supplies the U.S. Asia, and Europe.

Debt Down, Profits Up

On Jun 23 Omnova reported its second-quarter results that included net income of $5.1 million, up from a loss of more than $3 million. Earnings per share came in at 12 cents compared to the 7 cent loss last year and the 8 cent consensus estimate.

While sales were down almost 27% due to lower prices and decreased demand, it was partially offset by increasing market share. However, gross profit did increase to $40 million, up from $34 million. Margins were up to 24.8% from 25.4%.

Estimates Rising

Immediately following the report analysts began raising full-year estimates. The consensus for this year is now 34 cents, up from 27 cents since the report. Forecasts for next year are up 7 cents to 47 cents.

Compare these levels to the 3 cents loss last year and you will excellent growth rates. The growth rate for 2010 is expected to be just over 36%.

Trumping its Peers

Omnova is well positioned in the industry with a ROE of 24.3%, almost triple the average. The company also boasts a low 3.6 debt to equity ratio relative to the 23.5 times, which is the norm for its peers.

The Chart

Shares of OMN have been climbing almost straight up since the earnings release. Take a look at the chart below.

Read the full analyst report on OMN