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Specialty chemical company Chemtura Corporation (CHMT - Snapshot Report) has delivered six straight positive earnings surprises, including a 17.3% surprise in the second-quarter 2012. With relatively low valuation multiples, including a price-to-sales (P/S) ratio as low as 0.5, this Zacks #2 Rank (Buy) stock is worth considering as a value pick.

Chemtura Tops in Second Quarter

Chemtura’s second quarter adjusted earnings of 61 cents per share outperformed the Zacks Consensus Estimate of 52 cents. The results, announced on August 1, were driven by growth across the AgroSolutions and Consumer Products divisions. Shares shot up as much as 15% following the earnings release, making it one of the biggest gainers in the basic materials sector.

Revenues, however, fell 4% year over year to $845 million. Declines across the Industrial Performance Products and Industrial Engineered Products segments were, in part, offset by higher revenues from AgroSolutions and Consumer Products units.

Chemtura said that it expects to deliver year over year growth in the remainder of 2012, aided by an improvement in its distribution channels, continued innovation and a recovery in its Consumer Products segment. The company also doubled its share repurchase authorization to $100 million.

Rising Earnings Estimates

One out of 3 estimates has been revised higher in the last 30 days for 2012, pushing the Zacks Consensus Estimate up 4 cents (or 2.6%) to $1.55 per share. This reflects a projected annualized growth of roughly 38.4%.

One estimate out of 3 moved higher for 2013 over the same time frame, boosting the Zacks Consensus Estimate by a couple of cents (or 1%) to $1.99 per share. This represents an estimated year over year growth of 28.4%.

Plenty of Value

Chemtura’s shares have recovered following a steep drop in the second half of 2011. The stock has performed reasonably well so far this year, generating a healthy year-to-date return of roughly 29%. With its shares still trading below its 52-week high of $17.91 (reached on May 3, 2012), there is room for upside.

In addition to having a low P/S, the stock has a forward P/E ratio of just 9.8. It also has a low price-to-book (P/B) ratio of 1.4. (A P/S ratio lower than 1.0, a P/E below 15.0 and a P/B ratio under 3.0 generally indicate value). Moreover, the company has a PEG ratio of 0.43, a 57% discount to the benchmark of 1 for a fairly priced stock.

Founded in 1900, Chemtura Corporation makes and distributes specialty chemical solutions and consumer products globally with annual sales of $3 billion. Its broad range of offerings includes recreational water purification products, petroleum additives, seed treatments, pesticides, bromine and bromine-based products and hot cast elastomers. The company, which has a market cap of roughly $1.5 billion, serves a host of industries including agriculture, automotive, building and construction, electronics, packaging, plastics and transportation.

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