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Olin (OLN) Shares Pop 120% YTD: What's Driving the Rally?
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Olin Corporation’s (OLN - Free Report) shares have shot up 119.6% so far this year, outperforming the industry’s rise of 14.1%. The company has also topped the S&P 500’s 25.5% rise over the same period.
Let’s dive into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.
Image Source: Zacks Investment Research
What’s Driving the Stock?
Olin is benefiting from the Lake City U.S. Army contract, productivity actions, and investment in the Information Technology (IT) project. Better-than-expected earnings performance in the first three quarters of 2021 and upbeat prospects have also contributed to the rally in the company’s shares.
The company’s Chlor Alkali Products & Vinyls and Epoxy segments are benefiting from higher prices. Its Winchester segment is also poised to benefit from the Lake City U.S. Army ammunition contract. The multi-year contract is expected to significantly boost annual profitability of the unit. Sales from the Winchester segment surged 94% year over year in the third quarter of 2021, driven by higher commercial and military sales, including ammunition produced at Lake City as well as higher commercial ammunition pricing.
Olin also remains committed to improve its cost structure and efficiency and drive productivity through a number of projects. It currently has more than 1,200 active productivity projects that are expected to contribute to savings in 2021. It expects productivity measures to deliver $100 million of net savings in 2021.
The company is also aiming for an improvement in its net debt to adjusted EBITDA ratio through a combination of improved adjusted EBITDA, disciplined capital spending, and debt reduction by the end of 2021. For the full year, it is targeting debt reduction of roughly $1.1 billion by using the cash generated from operations.
Olin is using its cash strategically and remains committed to boosting shareholders' returns. The company, last month, announced that its board has approved a new $1 billion share repurchase program. It repurchased around 1.5 million shares of common stock for $68.3 million in the third quarter.
The company is also expected to gain from cost and other benefits from its investment in the IT project. The project, which involves implementation of necessary IT infrastructure, is expected to maximize cost effectiveness, efficiency and control over its global chemical operations by standardizing business processes.
Earnings estimates for Olin have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased around 16.5% while the same for fourth-quarter 2021 has gone up 46.4%. The favorable estimate revisions instill investor confidence in the stock.
Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 10.6% upward over the past 60 days.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 41% in a year.
AdvanSix has a projected earnings growth rate of 194.5% for the current year. ASIX's consensus estimate for the current year has been revised 5.9% upward over the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 110% in a year.
Intrepid Potash has a projected earnings growth rate of 244.7% for the current year. The consensus estimate for IPI’s current year has been revised 3.3% upward over the past 60 days.
Intrepid Potash beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 132.9%, on average. IPI shares have surged around 148% in a year.
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Olin (OLN) Shares Pop 120% YTD: What's Driving the Rally?
Olin Corporation’s (OLN - Free Report) shares have shot up 119.6% so far this year, outperforming the industry’s rise of 14.1%. The company has also topped the S&P 500’s 25.5% rise over the same period.
Let’s dive into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.
What’s Driving the Stock?
Olin is benefiting from the Lake City U.S. Army contract, productivity actions, and investment in the Information Technology (IT) project. Better-than-expected earnings performance in the first three quarters of 2021 and upbeat prospects have also contributed to the rally in the company’s shares.
The company’s Chlor Alkali Products & Vinyls and Epoxy segments are benefiting from higher prices. Its Winchester segment is also poised to benefit from the Lake City U.S. Army ammunition contract. The multi-year contract is expected to significantly boost annual profitability of the unit. Sales from the Winchester segment surged 94% year over year in the third quarter of 2021, driven by higher commercial and military sales, including ammunition produced at Lake City as well as higher commercial ammunition pricing.
Olin also remains committed to improve its cost structure and efficiency and drive productivity through a number of projects. It currently has more than 1,200 active productivity projects that are expected to contribute to savings in 2021. It expects productivity measures to deliver $100 million of net savings in 2021.
The company is also aiming for an improvement in its net debt to adjusted EBITDA ratio through a combination of improved adjusted EBITDA, disciplined capital spending, and debt reduction by the end of 2021. For the full year, it is targeting debt reduction of roughly $1.1 billion by using the cash generated from operations.
Olin is using its cash strategically and remains committed to boosting shareholders' returns. The company, last month, announced that its board has approved a new $1 billion share repurchase program. It repurchased around 1.5 million shares of common stock for $68.3 million in the third quarter.
The company is also expected to gain from cost and other benefits from its investment in the IT project. The project, which involves implementation of necessary IT infrastructure, is expected to maximize cost effectiveness, efficiency and control over its global chemical operations by standardizing business processes.
Earnings estimates for Olin have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased around 16.5% while the same for fourth-quarter 2021 has gone up 46.4%. The favorable estimate revisions instill investor confidence in the stock.
Other Stocks to Consider
Some other top-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Intrepid Potash, Inc. (IPI - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 10.6% upward over the past 60 days.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 41% in a year.
AdvanSix has a projected earnings growth rate of 194.5% for the current year. ASIX's consensus estimate for the current year has been revised 5.9% upward over the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 110% in a year.
Intrepid Potash has a projected earnings growth rate of 244.7% for the current year. The consensus estimate for IPI’s current year has been revised 3.3% upward over the past 60 days.
Intrepid Potash beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 132.9%, on average. IPI shares have surged around 148% in a year.