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The chemical industry is still hanging tough in 2012 despite the cloudy Eurozone and China outlook. Ashland Inc. (ASH - Snapshot Report) recently blew by the Zacks Consensus Estimate for Q1. Yet this Zacks #1 Rank (Strong Buy) is still a value stock with a forward P/E of just 11.3.

Ashland is a global specialty chemical company with 4 business segments: Ashland Specialty Ingredients, Ashland Water Technologies, Ashland Performance Materials and Ashland Consumer Markets.

On the consumer side, Ashland makes Valvoline, the well known lubricating oil. It also operates the Valvoline Instant Oil Change quick-lube franchises.

Ashland Beat for the Fifth Quarter in a Row

On Jan 24, Ashland reported its preliminary results for the first quarter of fiscal 2012 and easily beat the Zacks Consensus Estimate by 22%. Earnings per share were $1.20 compared to the consensus of 98 cents. It was the fifth earnings beat in a row.

Sales rose 6% to $1.9 billion. The Specialty Ingredients segment showed the largest gain, as sales jumped 19% to $628 million. The Consumer Market also climbed, by 8%, to $475 million.

Estimates Move Higher for Fiscal 2012

Ashland has been busy transforming itself into a specialty chemical company. The company says that process is now complete.

For 2012, it believes it still has pricing power which should generate significant improvement in margins and profitability. The company has positions in stable, less-cyclical markets so that it isn't as affected by what is going on in the broader economy.

The analysts took all of this as a bullish sign. The fiscal 2012 Zacks Consensus Estimate has jumped to $5.60 from $5.39 since the earnings report. 4 out of 9 estimates have been revised higher in that time.

This is further earnings growth of 13.6% as Ashland made only $4.93 in fiscal 2011.

Shares Rally But Still Have Value

Like most stocks, shares sold off in the summer of 2011. But they've been rallying ever since and are once again approaching the 2-year high.

But despite the hot share price, there is still a lot of value in Ashland.

In addition to a forward P/E of 11.3, which is below the S&P 500 average of 12.5, it also has a price-to-sales ratio of just 0.7. A P/S ratio under 1.0 usually means a company is undervalued.

Ashland also has another important value metric, which is a price-to-book ratio of just 1.2. A P/B ratio under 3.0 can indicate a company has value.

Shareholders are also rewarded with a dividend, currently yielding 1.1%.

For investors looking for both growth and value in the chemical sector, Ashland is one company to keep on the radar.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

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