Kraton Performance Polymers shares soared 9.4% in the last trading session to close at $45.41. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 3% loss over the past four weeks.
KRA’s shares popped after it agreed to be acquired by DL Chemical in an all-cash deal valued at roughly $2.5 billion. Under the deal terms, stockholders of Kraton will receive $46.50 in cash for each share of the company’s common stock they own. The offer price represents an attractive premium of around 50% over Kraton's unaffected trading value as of early July 2021. The transaction, which is subject to customary closing conditions, including the receipt of shareholder and regulatory approvals, is expected to complete by end of first-half 2022.
This specialty chemical company is expected to post quarterly earnings of $0.79 per share in its upcoming report, which represents a year-over-year change of +61.2%. Revenues are expected to be $464.7 million, up 24.4% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Kraton, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on KRA going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>