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Why Is Huntsman (HUN) Down 4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Huntsman (HUN - Free Report) . Shares have lost about 4% in that time frame, underperforming the S&P 500.

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

Huntsman's Earnings and Revenues Top Estimates in Q4

Huntsman recorded profits of $607 million or $2.73 per share in the fourth quarter of 2021, rising from $360 million or $1.54 in the year-ago quarter.

Barring one-time items, adjusted earnings per share rose to 95 cents in the reported quarter from 51 cents in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of 88 cents.

Revenues were $2,307 million, up 38.3% year over year from $1,668 million. The top line surpassed the Zacks Consensus Estimate of $2,231.7 million. Huntsman witnessed higher sales across all segments in the reported quarter and reaped the benefits of economic recovery, higher average selling prices and synergies arising from acquisitions.

Segment Highlights

Polyurethanes: Revenues from the segment rose 35.2% year over year to $1,393 million in the reported quarter due to higher MDI (methylene diphenyl diisocyanate) average selling prices in all the regions. An increase in sales volumes, primarily due to growth in the Americas region and across multiple markets also positively impacted revenues.

Performance Products: Revenues surged 54.7% to $410 million due to higher average selling prices led by strong demand on market recovery and higher raw-material costs. Volumes rose due to stronger demand.

Advanced Materials: Revenues from the unit jumped 53% to $317 million on higher average selling prices, increased volumes, the benefits of Gabriel acquisition and the recent divestiture of the India-based DIY business. Sales volumes increased across all markets on the back of a global market recovery. Average selling prices increased in response to higher raw-material costs.

Textile Effects: Revenues from the division rose 12.7% to $195 million. The increase can be attributed to higher average selling prices led by increases in raw material and logistics costs.

FY21 Results

Earnings (as reported) for full-year 2021 were $3.54 per share compared with 98 cents a year ago. Net sales increased 40.5% year over year to roughly $8,453 million.

Financials

Huntsman had total cash of $1,041 million at the end of the quarter, falling 34.7% year over year. The free cash flow used in continuing operations was $698 million in the quarter, rising from $88 million a year ago. The long-term debt was $1,538 million, rising modestly from $1,528 million a year ago.

Outlook

The company expects growth in earnings, higher adjusted EBITDA margins and improved free cash flow and cost optimization in 2022. In the second quarter of 2022, the company expects to complete the Geismar MDI splitter project that will expand the differentiated Polyurethanes business in the Americas.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 15.63% due to these changes.

VGM Scores

At this time, Huntsman has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Huntsman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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