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The specialty chemical sector is hanging tough. Cytec Industries Inc. (CYT) recently surprised on the Zacks Consensus Estimate for the fifth quarter in a row. While there are worries about the Eurozone debt crisis, this Zacks #1 Rank (Strong Buy) still sees growth in 2012. It is also a value stock, with a P/S ratio of just 0.9.

Cytec Industries is a specialty chemical company serving many different end markets such as aerospace, adhesives, automotive and industrial coatings, inks, mining and plastics.

The New Jersey-based company operates in 4 segments: In Process Separation, Engineered Materials, Additive Technologies, and Coating Resins.

Cytec Beat By 91% in the Fourth Quarter

On Jan 31, Cytec reported its fourth quarter results and blew by the Zacks Consensus Estimate by 41 cents. Earnings per share were 86 cents compared to the consensus of just 45 cents. It was a jump of 25% over the 69 cents the company made a year ago.

It was the company's largest earnings surprise of the last four quarters.

Sales rose 4% to $731 million from $700 million in the prior year. The quarter was boosted by Engineered Materials and In Process Separation which both saw volume growth due to strong demand.

Engineered Materials sales rose 16% to $239 million as volumes rose 11%, mainly due to higher build rates in the large commercial transport sector.

In Process Separation sales climbed 10% to $90 million with volumes up 3%.

Separation of the Coating Resins Business

The weakest segment was Coating Resins which saw a sales decline of 3% to $337 million as volumes fell 11% year over year due to weak market demand across all product lines, especially in Europe and Asia Pacific.

In the third quarter of 2011, the company revealed that it was analyzing alternatives in order to separate the Coatings Resins business from the rest of the company. It had retained J.P. Morgan to assist it with options.

A decision is expected in the second quarter of 2012. Cytec wants to focus on its more profitable and growing segments.

Outlook for 2012

Cytec was conservative in its outlook for 2012. It still expects the global economy to grow in 2012, but modestly. The emerging markets will also continue to show growth, but at a slower pace.

Normally, it has provided full year EPS guidance but this year, due to the separation possibilities with the Coating Resins business, the company decided not to do so.

2012 Zacks Consensus Estimate Rises

Since the earnings report, the 2012 Zacks Consensus has been inching higher.

It has moved up to $3.96 from $3.89 in just the last 7 days.

That is earnings growth of 8.2% as the company made $3.66 in 2011.

Is There Value?

Shares got crushed last summer when investors panicked about a global recession. Like a lot of stocks, though, its come roaring back.

But despite the rally, Cytec still has value characteristics.

In addition to a P/S ratio under 1.0, which usually indicates a company is undervalued, it also has a forward P/E of 14.4. While this isn't "cheap", it's under the 15x cut-off I use to find value stocks.

The company also has a price-to-book ratio of 1.7. A P/B ratio under 3.0 can mean a company is a value.

Shareholders are also rewarded with a small dividend, currently yielding 0.9%.

For investors looking for solid value fundamentals and 2012 growth, the chemical companies, like Cytec, should be on the list.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

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