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Kraton Corp (KRA) Up 18% in 3 Months: What's Driving It?

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Shares of Kraton Corporation have gained around 18% over the last three months. The chemical maker has also outperformed its industry’s gain of roughly 0.9% to over the same time frame.  

Kraton has a market cap of roughly $1.3 billion and average volume of shares traded in the last three months is around 240.7K.

Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock of late.



 

Driving Factors

Strong second-quarter 2017 results and upbeat outlook have contributed to a rally in Kraton’s shares. The company delivered a positive earnings surprise of 49.1% in the second quarter.

Kraton sees a more favorable raw material pricing environment on a year over year comparison basis and positive underlying business momentum for the remainder of 2017. The company remains committed to steer organic growth in key markets through state-of-the-art innovation and infrastructure.

Kraton, in May, announced the opening of a hydrogenated styrenic block copolymer (HSBC) plant in Mailiao, Taiwan. The plant will boost the company’s innovation-grade business, especially low molecular weight HSBC products. It will also help Kraton to effectively serve the growing export and Asian markets through higher production capacity of varied grades of HSBC products.

Kraton is also benefiting from the acquisition of Arizona Chemical in the form of cost reduction and operational improvements. The company delivered cost improvement and synergies worth $26 million in the first half of 2017. Kraton expects to realize transaction synergies of $65 million related to the Arizona Chemical acquisition by the end of this year.

Kraton should also gain from its efforts to reduce debt. The company plans to cut net debt by $100-$150 million in 2017.

Kraton Corporation Price and Consensus

 

Kraton Corporation Price and Consensus | Kraton Corporation Quote

Other Stocks to Consider

Other stocks in the basic materials space worth considering include Ingevity Corporation (NGVT - Free Report) , The Chemours Company (CC - Free Report) and FMC Corporation (FMC - Free Report) , all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has expected long-term earnings growth of 12%.

Chemours has expected long-term earnings growth of 15.5%.

FMC has expected earnings growth of 11.3% for the current year.

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