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PolyOne's Thermoplastic Elastomer Production to Come Online

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PolyOne Corporation’s thermoplastic elastomers (TPEs) production is expected to begin this summer at its existing facility in Pune, India. The  company currently makes color and additive concentrates, and engineered polymer solutions at the facility.

The addition of TPE production will allow manufacturers to source all of their specialty polymer requirements from a single domestic source. In India, PolyOne is the sole supplier of domestically produced materials such as color, engineered materials and thermoplastic elastomers, providing shorter lead time benefit to customers.

In 2014, PolyOne had opened a facility in Pune that focuses on the production of colorant and additive concentrates to serve end markets such as transportation, electronics & electrical, healthcare, wire & cable, and packaging.

PolyOne has underperformed the industry it belongs to over the last six months. While the company’s shares have gained around 17.4%, the industry rallied 38.9%.

The company reported adjusted earnings per share of 41 cents for the fourth quarter, surpassing the Zacks Consensus Estimate of 39 cents. Sales were up 15% year over year to $801 million, outpacing the Zacks Consensus Estimate of $742 million.

In the first quarter of 2018, PolyOne anticipates further increase in raw material cost. The company also expects cash flow to improve in 2018, aided by improvement in earnings and the benefit of lower U.S. tax rates.

PolyOne sees free cash flow to be around $200-$220 million for 2018. Capital expenditures are projected to be in the range of $75-$85 million for the year.

PolyOne Corporation Price and Consensus

Zacks Rank & Key Picks

PolyOne carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the chemical space are Methanex Corporation (MEOH - Free Report) , LyondellBasell Industries NV (LYB - Free Report) and Air Products and Chemicals Inc. (APD - Free Report) .

Methanex has an expected long-term earnings growth rate of 15% and a Zacks Rank #1 (Strong Buy). Its shares have rallied 19% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

LyondellBasell has an expected long-term earnings growth rate of 9% and a Zacks Rank #2 (Buy). Its shares have gained 19.6% in a year.

Air Products has an expected long-term earnings growth rate of 14.2% and a Zacks Rank #2. Its shares were up 12.6% over a year.

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