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Kronos Worldwide (KRO - Free Report) , a Zacks Rank #1 (Strong Buy) stock, has surged over 200% since the March 2020 bottom after dropping to roughly $6/share at the trough of the pandemic-induced market plunge. Only the best companies that are experiencing stellar revenue and earnings growth are able to make this type of price move. KRO is currently trading near new highs on the year, even as the market continues to be in a correction.
Kronos boasts the highest Zacks Momentum Style Score of ‘A’. The company is a component of the Zacks Chemical – Diversified industry, which ranks in the top 22% of all Zacks Ranked Industries. The group is roughly flat this year while the S&P is down more than 13%. This industry holds several attractive characteristics as shown below:
Image Source: Zacks Investment Research
Quantitative research studies have repeatedly shown that roughly half of a stock’s future price appreciation is due to its industry grouping. By targeting stocks contained within top industry groups, investors can dramatically improve their rate of success. The Chemicals – Diversified industry is part of the Zacks Basic Materials sector, which ranks in the top 19% of all 16 Zacks Ranked Sectors.
Company Description
Kronos is a global producer and marketer of titanium dioxide pigments. Titanium dioxide is a naturally occurring oxide of titanium. And when ground into a fine powder, it transforms into a pigment that provides whiteness, brightness, opacity and durability for products like paint, coatings, plastics, and paper.
Nature does not yield titanium dioxide in a usable form – it must be carefully mined and refined, and Kronos uses chloride and sulfate processes to achieve this. Through its distributors and agents, Kronos sells its products to over 4,000 domestic and international paint, plastics, and paper manufacturers in approximately 100 countries. The company was founded in 1916 and is headquartered in Dallas, TX.
Recent Earnings and Future Estimates
Kronos has exceeded earnings estimates in three of the past four quarters. The company most recently reported first-quarter earnings earlier this month of $57.5 million or $0.50 cents per share, which translated to a 78.57% positive surprise versus the $0.28 cent consensus estimate. This compares quite favorably to the $0.17 per share that Kronos delivered in the same quarter last year.
Net sales rose 21% year-over-year in the first quarter to $562.9 million, which were driven by higher titanium dioxide selling prices and volumes. Kronos has posted a trailing four-quarter average earnings surprise of 24.02%. The company has been consistently beating earnings estimates lately and the stock price is reflecting this.
Looking ahead, earnings estimates for this year as well as 2023 have been skyrocketing. In the past 30 days, fiscal 2022 EPS estimates have been increased by 60.94% to $2.06 per share, which reflects a 110.2% growth rate relative to last year. It’s obvious the growth is there and looks set to continue.
Charting the Course
KRO has really started to display true signs of relative strength this year, as it has returned investors north of 30% - widely outperforming the major indices. The price ascent has not slowed down as of late, even as the recent rally has taken a breather.
Image Source: StockCharts
Notice how both the 50 and 200-day moving averages are sloping up in the chart below, evidenced by the blue and red lines, respectively. The stock does appear extended in the short-term, and bullish investors may consider waiting for a slight pullback before initiating a new purchase.
However, empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. And as we know, Kronos has seen a steady batch of positive revisions as of late. As long as this trend remains intact (and KRO continues to post earnings beats), the stock should continue its bullish move this year.
Other Factors to Consider
Despite the massive price run, KRO currently trades at just a 9.4 forward P/E, which compares favorably to that of its industry group (10.68).
Kronos is currently ranked a Zacks Rank #1 (Strong Buy). The stock is ranked favorably by our Style Score Categories with a ‘B’ for Value and ‘A’ for Momentum, paving the way for an overall B VGM score. This indicates that there’s a strong likelihood that Kronos momentum will continue on the heels of strong sales and earnings growth. Kronos also pays an annual dividend of $0.76 cents, which translates to a very respectable 4.07% yield.
Bottom Line
With a history of surpassing earnings estimates and an improving future outlook, Kronos represents a great opportunity. It’s not difficult to see why this stock is a compelling investment with an attractive dividend yield and strong price momentum.
Solid institutional buying and a high-performing industry group should continue to provide a tailwind for the stock price. Recent positive earnings estimate revisions will help to provide a cushion during any potential market decline. If you’re looking for a way to diversify your portfolio, make sure to put KRO on your shortlist.
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Bull of the Day: Kronos Worldwide, Inc. (KRO)
Kronos Worldwide (KRO - Free Report) , a Zacks Rank #1 (Strong Buy) stock, has surged over 200% since the March 2020 bottom after dropping to roughly $6/share at the trough of the pandemic-induced market plunge. Only the best companies that are experiencing stellar revenue and earnings growth are able to make this type of price move. KRO is currently trading near new highs on the year, even as the market continues to be in a correction.
Kronos boasts the highest Zacks Momentum Style Score of ‘A’. The company is a component of the Zacks Chemical – Diversified industry, which ranks in the top 22% of all Zacks Ranked Industries. The group is roughly flat this year while the S&P is down more than 13%. This industry holds several attractive characteristics as shown below:
Image Source: Zacks Investment Research
Quantitative research studies have repeatedly shown that roughly half of a stock’s future price appreciation is due to its industry grouping. By targeting stocks contained within top industry groups, investors can dramatically improve their rate of success. The Chemicals – Diversified industry is part of the Zacks Basic Materials sector, which ranks in the top 19% of all 16 Zacks Ranked Sectors.
Company Description
Kronos is a global producer and marketer of titanium dioxide pigments. Titanium dioxide is a naturally occurring oxide of titanium. And when ground into a fine powder, it transforms into a pigment that provides whiteness, brightness, opacity and durability for products like paint, coatings, plastics, and paper.
Nature does not yield titanium dioxide in a usable form – it must be carefully mined and refined, and Kronos uses chloride and sulfate processes to achieve this. Through its distributors and agents, Kronos sells its products to over 4,000 domestic and international paint, plastics, and paper manufacturers in approximately 100 countries. The company was founded in 1916 and is headquartered in Dallas, TX.
Recent Earnings and Future Estimates
Kronos has exceeded earnings estimates in three of the past four quarters. The company most recently reported first-quarter earnings earlier this month of $57.5 million or $0.50 cents per share, which translated to a 78.57% positive surprise versus the $0.28 cent consensus estimate. This compares quite favorably to the $0.17 per share that Kronos delivered in the same quarter last year.
Net sales rose 21% year-over-year in the first quarter to $562.9 million, which were driven by higher titanium dioxide selling prices and volumes. Kronos has posted a trailing four-quarter average earnings surprise of 24.02%. The company has been consistently beating earnings estimates lately and the stock price is reflecting this.
Looking ahead, earnings estimates for this year as well as 2023 have been skyrocketing. In the past 30 days, fiscal 2022 EPS estimates have been increased by 60.94% to $2.06 per share, which reflects a 110.2% growth rate relative to last year. It’s obvious the growth is there and looks set to continue.
Charting the Course
KRO has really started to display true signs of relative strength this year, as it has returned investors north of 30% - widely outperforming the major indices. The price ascent has not slowed down as of late, even as the recent rally has taken a breather.
Image Source: StockCharts
Notice how both the 50 and 200-day moving averages are sloping up in the chart below, evidenced by the blue and red lines, respectively. The stock does appear extended in the short-term, and bullish investors may consider waiting for a slight pullback before initiating a new purchase.
However, empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. And as we know, Kronos has seen a steady batch of positive revisions as of late. As long as this trend remains intact (and KRO continues to post earnings beats), the stock should continue its bullish move this year.
Other Factors to Consider
Despite the massive price run, KRO currently trades at just a 9.4 forward P/E, which compares favorably to that of its industry group (10.68).
Kronos is currently ranked a Zacks Rank #1 (Strong Buy). The stock is ranked favorably by our Style Score Categories with a ‘B’ for Value and ‘A’ for Momentum, paving the way for an overall B VGM score. This indicates that there’s a strong likelihood that Kronos momentum will continue on the heels of strong sales and earnings growth. Kronos also pays an annual dividend of $0.76 cents, which translates to a very respectable 4.07% yield.
Bottom Line
With a history of surpassing earnings estimates and an improving future outlook, Kronos represents a great opportunity. It’s not difficult to see why this stock is a compelling investment with an attractive dividend yield and strong price momentum.
Solid institutional buying and a high-performing industry group should continue to provide a tailwind for the stock price. Recent positive earnings estimate revisions will help to provide a cushion during any potential market decline. If you’re looking for a way to diversify your portfolio, make sure to put KRO on your shortlist.