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Kraton Corp (KRA) Up 46% in 3 Months: What's Driving It?
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Shares of Kraton Corporation have gained around 46% over the last three months. The chemical maker has also significantly outperformed its industry’s gain of roughly 5% to over the same time frame.
Kraton has a market cap of roughly $1.5 billion and average volume of shares traded in the last three months is around 307.3K.
Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock of late.
Driving Factors
Strong third-quarter 2017 results and upbeat prospects have contributed to a rally in Kraton’s shares. The company delivered a positive earnings surprise of 54.1% in the third quarter. Adjusted earnings of $1.51 per share outstripped the Zacks Consensus Estimate of 98 cents. Revenues climbed 12.5% year over year to $510.9 million and topped the Zacks Consensus Estimate of $468 million.
The company gained from strong volume growth in its Polymer segment and improving fundamentals in its Chemical segment in the third quarter. Factoring in the strong third-quarter results, the company sees adjusted EBITDA for 2017 to be around $375 million.
Kraton is benefiting from the acquisition of Arizona Chemical in the form of cost reduction and operational improvements. The company delivered cost improvement and transaction synergies worth $10.7 million in the third quarter.
Kraton also realized operational cost improvement and transaction synergies related to the Arizona Chemical acquisition of $65 million at the end of September 2017, well ahead of its initial year-end 2018 target. The company also expects to realize roughly $50 million of its $70 million cost reduction target for its Polymer segment by end-2017 with the balance is anticipated to be realized in 2018.
Kraton should also gain from its efforts to reduce debt. The company cut its net debt by $87 million in the third quarter leveraging improved cash generation. It now plans to reduce net debt by $125-$150 million in 2017.
Moreover, Kraton remains committed to steer organic growth in key markets through state-of-the-art innovation and infrastructure. The company, 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.
Westlake has an expected long-term earnings growth of 10.6%. Its shares are up roughly 69% year to date.
Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 39% year to date.
Albemarle has an expected long-term earnings growth of 14.8%. Its shares are up roughly 59% year to date.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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Kraton Corp (KRA) Up 46% in 3 Months: What's Driving It?
Shares of Kraton Corporation have gained around 46% over the last three months. The chemical maker has also significantly outperformed its industry’s gain of roughly 5% to over the same time frame.
Kraton has a market cap of roughly $1.5 billion and average volume of shares traded in the last three months is around 307.3K.
Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock of late.
Driving Factors
Strong third-quarter 2017 results and upbeat prospects have contributed to a rally in Kraton’s shares. The company delivered a positive earnings surprise of 54.1% in the third quarter. Adjusted earnings of $1.51 per share outstripped the Zacks Consensus Estimate of 98 cents. Revenues climbed 12.5% year over year to $510.9 million and topped the Zacks Consensus Estimate of $468 million.
The company gained from strong volume growth in its Polymer segment and improving fundamentals in its Chemical segment in the third quarter. Factoring in the strong third-quarter results, the company sees adjusted EBITDA for 2017 to be around $375 million.
Kraton is benefiting from the acquisition of Arizona Chemical in the form of cost reduction and operational improvements. The company delivered cost improvement and transaction synergies worth $10.7 million in the third quarter.
Kraton also realized operational cost improvement and transaction synergies related to the Arizona Chemical acquisition of $65 million at the end of September 2017, well ahead of its initial year-end 2018 target. The company also expects to realize roughly $50 million of its $70 million cost reduction target for its Polymer segment by end-2017 with the balance is anticipated to be realized in 2018.
Kraton should also gain from its efforts to reduce debt. The company cut its net debt by $87 million in the third quarter leveraging improved cash generation. It now plans to reduce net debt by $125-$150 million in 2017.
Moreover, Kraton remains committed to steer organic growth in key markets through state-of-the-art innovation and infrastructure. The company, 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 Corporation Price and Consensus
Kraton Corporation Price and Consensus | Kraton Corporation Quote
Some Other Stocks to Consider
Other top-ranked companies in the basic materials space include Westlake Chemical Corporation (WLK - Free Report) , Ingevity Corporation (NGVT - Free Report) and Albemarle Corporation (ALB - Free Report) , all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Westlake has an expected long-term earnings growth of 10.6%. Its shares are up roughly 69% year to date.
Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 39% year to date.
Albemarle has an expected long-term earnings growth of 14.8%. Its shares are up roughly 59% year to date.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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