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Here's Why Koninklijke DSM (RDSMY) Is a Good Investment Pick
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Koninklijke DSM N.V.’s efforts to improve its product portfolio, reduce costs, improve operational efficiency and strategic associations make it a solid bet for investors now.
It currently sports a Zacks Rank #1 (Strong Buy).
In the last six months, the company’s American Depository Receipts have yielded 17.5% return, outperforming 6.9% gain recorded by the industry it belongs to.
Why the Upgrade?
Koninklijke DSM’s financial performance in second-quarter 2017 was impressive, with revenues increasing 8% year over year on the back of sales growth in Nutrition, Materials and Innovation Center segments. Volume growth and favorable price mix contributed 6% to sales growth while the rest 2% came from positive impact of foreign currency translation. Adjusted net profit grew 30% year over year.
In the quarters ahead, Koninklijke DSM anticipates benefiting from innovation of new products and strong customer relationships. Also, improving operational efficiency and reducing costs remain priorities for it. For 2017, the company increased its earnings before interest, tax, depreciation and amortization (EBITDA) growth rate expectation to double digits from the earlier projection of high single-digit. Return on capital employed will grow over 100 basis points (bps) versus double digits bps expected earlier.
Additionally, benefits from strategic associations will improve profitability in the quarters ahead. Notably, the company’s partnership with Nanjing Cosmos Chemical Co. (entered in July 2017) will strengthen its UV filters portfolio. The two companies will produce UV filters PARSOL Max and PARSOL Shield. Also, the company is consistently engaged in new programs like Clean Cow project, aiming to lower methane emissions in cattle, the Green Ocean partnership, Niaga Technology for fully-recyclable carpets, Dyneema Carbon Composites and many more. These initiatives are likely to contribute to its EBITDA growth in the years ahead.
Investors seem to be optimistic about Koninklijke DSM’s future prospects, as evident from the positive revisions in earnings estimates for the stock. Over the last 60 days, the Zacks Consensus Estimate for the company increased 11.4% to $1.17 for 2017 and 8% to $1.22 for 2018.
Koninklijke DSM has a market capitalization of approximately $13.1 billion. Other stocks worth considering in the industry include The Chemours Company (CC - Free Report) , Kronos Worldwide Inc. (KRO - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) . While both Chemours Company and Kronos Worldwide sport a Zacks Rank #1, Air Products and Chemicals carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours Company pulled off an average positive earnings surprise of 12.07% for the last four quarters. The stock’s earnings estimates stock improved for both 2017 and 2018, over the last 60 days.
Kronos Worldwide delivered an average positive earnings surprise of 76.05% for the trailing four quarters. Also, earnings expectations for 2017 remained stable while improved for 2018 over the past 60 days.
Air Products and Chemicals’ financial performance was impressive, with an average positive earnings surprise of 1.77% for the last four quarters. Also, earnings estimates for fiscal 2017 and fiscal 2018 were revised upward over the last 60 days.
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Here's Why Koninklijke DSM (RDSMY) Is a Good Investment Pick
Koninklijke DSM N.V.’s efforts to improve its product portfolio, reduce costs, improve operational efficiency and strategic associations make it a solid bet for investors now.
It currently sports a Zacks Rank #1 (Strong Buy).
In the last six months, the company’s American Depository Receipts have yielded 17.5% return, outperforming 6.9% gain recorded by the industry it belongs to.
Why the Upgrade?
Koninklijke DSM’s financial performance in second-quarter 2017 was impressive, with revenues increasing 8% year over year on the back of sales growth in Nutrition, Materials and Innovation Center segments. Volume growth and favorable price mix contributed 6% to sales growth while the rest 2% came from positive impact of foreign currency translation. Adjusted net profit grew 30% year over year.
In the quarters ahead, Koninklijke DSM anticipates benefiting from innovation of new products and strong customer relationships. Also, improving operational efficiency and reducing costs remain priorities for it. For 2017, the company increased its earnings before interest, tax, depreciation and amortization (EBITDA) growth rate expectation to double digits from the earlier projection of high single-digit. Return on capital employed will grow over 100 basis points (bps) versus double digits bps expected earlier.
Additionally, benefits from strategic associations will improve profitability in the quarters ahead. Notably, the company’s partnership with Nanjing Cosmos Chemical Co. (entered in July 2017) will strengthen its UV filters portfolio. The two companies will produce UV filters PARSOL Max and PARSOL Shield. Also, the company is consistently engaged in new programs like Clean Cow project, aiming to lower methane emissions in cattle, the Green Ocean partnership, Niaga Technology for fully-recyclable carpets, Dyneema Carbon Composites and many more. These initiatives are likely to contribute to its EBITDA growth in the years ahead.
Investors seem to be optimistic about Koninklijke DSM’s future prospects, as evident from the positive revisions in earnings estimates for the stock. Over the last 60 days, the Zacks Consensus Estimate for the company increased 11.4% to $1.17 for 2017 and 8% to $1.22 for 2018.
Koninklijke DSM NV Price and Consensus
Koninklijke DSM NV Price and Consensus | Koninklijke DSM NV Quote
Other Stocks to Consider
Koninklijke DSM has a market capitalization of approximately $13.1 billion. Other stocks worth considering in the industry include The Chemours Company (CC - Free Report) , Kronos Worldwide Inc. (KRO - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) . While both Chemours Company and Kronos Worldwide sport a Zacks Rank #1, Air Products and Chemicals carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours Company pulled off an average positive earnings surprise of 12.07% for the last four quarters. The stock’s earnings estimates stock improved for both 2017 and 2018, over the last 60 days.
Kronos Worldwide delivered an average positive earnings surprise of 76.05% for the trailing four quarters. Also, earnings expectations for 2017 remained stable while improved for 2018 over the past 60 days.
Air Products and Chemicals’ financial performance was impressive, with an average positive earnings surprise of 1.77% for the last four quarters. Also, earnings estimates for fiscal 2017 and fiscal 2018 were revised upward over the last 60 days.
4 Surprising Tech Stocks to Keep an Eye On
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really takes off.
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