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Olin's (OLN) Shares Up 77% YTD: What's Driving the Stock?
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Olin Corporation’s (OLN - Free Report) shares have shot up 76.7% year to date, outperforming the industry’s rise of 9.7%. The company has also topped the S&P 500’s 16.3% rise over the same period.
A solid first-quarter performance, an upbeat outlook for second-quarter 2021 and a number of tailwinds have contributed to the run-up in Olin’s shares.
The company recorded first-quarter adjusted earnings of $1.53 per share, beating the Zacks Consensus Estimate of $1.34. Net sales rose roughly 35% year over year to $1,918.8 million, surpassing the Zacks Consensus Estimate of $1,891.1 million. Earnings estimates for the second quarter have been rising in the past three months with an increase of around 41.7%.
The company, in its first-quarter earnings call, said that it expects its recent price hike announcements for chlorine, epichlorohydrin, epoxy resins, bleach, ethylene dichloride, caustic soda and chlorinated organics to favorably contribute to its Chemicals businesses in the second quarter. Second-quarter adjusted EBITDA is projected to improve sequentially from first-quarter 2021 levels, barring the net one-time financial benefits from Winter Storm Uri.
Moreover, the investment in the Information Technology (IT) project is expected to maximize cost-effectiveness and provide cost savings roughly to the tune of $50 million annually, besides giving it control over its global chemical operations by standardizing business processes.
The company also anticipates the Lake City U.S. Army contract to increase the annual revenues of its Winchester segment between $450 and $550 million and adjusted EBITDA by $50 million.
The company remains dedicated to improve its cost structure and efficiency and also drive productivity through a number of projects. It expects productivity measures like plant closures and raw materials and railcar management to deliver $50-$100 million of net savings in 2021. Productivity actions are expected to positively contribute to second-quarter results.
Other similar-ranked stocks in the basic materials space include Dow Inc. (DOW - Free Report) , Avient Corporation (AVNT - Free Report) and Cabot Corporation (CBT - Free Report) .
Dow has a projected earnings growth rate of 336.1% for the current year. The company’s shares have grown 42.2% in a year.
Avient has a projected earnings growth rate of 64.2% for the current year. The company’s shares have appreciated 82.4% over a year.
Cabot has a projected earnings growth rate of 137.5% for the current year. The company’s shares have jumped 48.2% over a year.
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Olin's (OLN) Shares Up 77% YTD: What's Driving the Stock?
Olin Corporation’s (OLN - Free Report) shares have shot up 76.7% year to date, outperforming the industry’s rise of 9.7%. The company has also topped the S&P 500’s 16.3% rise over the same period.
Image Source: Zacks Investment Research
Let’s dive into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation. You can see the complete list of today’s Zacks #1 Rank stocks here.
What’s Favoring the Stock?
A solid first-quarter performance, an upbeat outlook for second-quarter 2021 and a number of tailwinds have contributed to the run-up in Olin’s shares.
The company recorded first-quarter adjusted earnings of $1.53 per share, beating the Zacks Consensus Estimate of $1.34. Net sales rose roughly 35% year over year to $1,918.8 million, surpassing the Zacks Consensus Estimate of $1,891.1 million. Earnings estimates for the second quarter have been rising in the past three months with an increase of around 41.7%.
The company, in its first-quarter earnings call, said that it expects its recent price hike announcements for chlorine, epichlorohydrin, epoxy resins, bleach, ethylene dichloride, caustic soda and chlorinated organics to favorably contribute to its Chemicals businesses in the second quarter. Second-quarter adjusted EBITDA is projected to improve sequentially from first-quarter 2021 levels, barring the net one-time financial benefits from Winter Storm Uri.
Moreover, the investment in the Information Technology (IT) project is expected to maximize cost-effectiveness and provide cost savings roughly to the tune of $50 million annually, besides giving it control over its global chemical operations by standardizing business processes.
The company also anticipates the Lake City U.S. Army contract to increase the annual revenues of its Winchester segment between $450 and $550 million and adjusted EBITDA by $50 million.
The company remains dedicated to improve its cost structure and efficiency and also drive productivity through a number of projects. It expects productivity measures like plant closures and raw materials and railcar management to deliver $50-$100 million of net savings in 2021. Productivity actions are expected to positively contribute to second-quarter results.
Olin Corporation Price and Consensus
Olin Corporation price-consensus-chart | Olin Corporation Quote
Other Stocks to Consider
Other similar-ranked stocks in the basic materials space include Dow Inc. (DOW - Free Report) , Avient Corporation (AVNT - Free Report) and Cabot Corporation (CBT - Free Report) .
Dow has a projected earnings growth rate of 336.1% for the current year. The company’s shares have grown 42.2% in a year.
Avient has a projected earnings growth rate of 64.2% for the current year. The company’s shares have appreciated 82.4% over a year.
Cabot has a projected earnings growth rate of 137.5% for the current year. The company’s shares have jumped 48.2% over a year.