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Ashland (ASH) Down 2.1% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Ashland (ASH - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ashland due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ashland’s Earnings Miss, Sales Meet Estimates in Q3

Ashland logged profit from continuing operations of $50 million or 81 cents per share in the third quarter of fiscal 2020 (ended Jun 30, 2020), up from a profit of $23 million or 37 cents per share in the prior-year quarter.

Barring one-time items, adjusted earnings were 84 cents per share, up from 77 cents in the year-ago quarter. It, however, missed the Zacks Consensus Estimate of 85 cents per share.

Sales fell 10% year over year to $574 million, in line with the Zacks Consensus Estimate. Sales were hurt by the effects of the prior year’s business losses and unfavorable foreign currency.

Segment Highlights

Consumer Specialties: Sales in the segment fell 1% year over year to $344 million in the reported quarter, impacted by business losses as well as unfavorable currency swings.

Industrial Specialties: Sales in the division slipped 23% year over year to $205 million, hurt by reduced industrial demand and unfavorable currency.

Intermediates & Solvents: Sales in the segment dropped 10% year over year to $37 million, impacted by reduced pricing on intercompany sales of butanediol and merchant-derivative sales.

Financials

The company ended the quarter with cash and cash equivalents of $416 million, a roughly 215% increase year over year. Long-term debt was $1,547 million at the end of the quarter, down 32% year over year.

Cash provided by operating activities from continuing operations was $140 million, up from $87 million in the prior-year quarter.

Outlook

Ashland said that its cost-reduction plans remain on track to generate $40 million of run-rate savings by the end of fiscal 2020. Additionally, the company intends to incur $20-$30 million of the earlier-disclosed reduced fixed-cost absorption associated with inventory-control measures during the fiscal fourth quarter.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -7.44% due to these changes.

VGM Scores

At this time, Ashland has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ashland has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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