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Huntsman (HUN) Up 39% in 6 Months: What's Driving the Rally?
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Huntsman Corporation’s (HUN - Free Report) shares have popped 39.1% over the past six months. The rally has resulted in the stock outperforming its industry’s decline of 4.4% over the same time frame. The chemical maker has also topped the S&P 500’s 5.9% decline over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #2 (Buy) stock.
Image Source: Zacks Investment Research
What’s Going in HUN’s Favor?
Strong fourth-quarter earnings performance and upbeat outlook have contributed to the rally in the company's shares. Huntsman’s adjusted earnings per share rose to 95 cents in the fourth quarter from 51 cents in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of 88 cents. Revenues climbed around 38% year over year to $2,307 million and surpassed the Zacks Consensus Estimate of $2,231.7 million. Huntsman witnessed higher sales across all segments and reaped the benefits of economic recovery, higher average selling prices and synergies arising from acquisitions.
The company recently announced an updated outlook for first-quarter 2022. It now anticipates adjusted EBITDA for the quarter to be at or greater than the high end of the earlier-announced guidance of $350-$380 million. It revised the guidance after reviewing February results and the developing business trends in March. The improved guidance is led by continued momentum in the Performance Products segment and to a lesser degree in Advanced Materials. In the Polyurethanes segment, headwinds in the European region are being masked by strength in North America and Asia.
Huntsman is benefiting from its investment in downstream businesses and differentiated product innovation. It remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.
The company's Polyurethanes segment is well positioned for strong upside in the long term on the back of its focus on ramping up its high-value differentiated downstream portfolio. Substitution of MDI for less effective materials will remain a key driving factor for the MDI business.
Huntsman should also gain from significant synergies of acquisitions. Its strong liquidity and balance sheet leverage gives it adequate flexibility to continue to develop and expand its core businesses through acquisitions and internal investments.
The company expects to deliver around $240 million of annualized cost optimization and acquisition run rate synergies by the end of 2023. It also remains on track with the integration of CVC Thermoset and Gabriel Performance Products acquisitions. Huntsman expects to achieve acquisitions-related run rate synergies of roughly $55 million by first-quarter 2023.
Earnings estimates for Huntsman have also been going up over the past two months. The Zacks Consensus Estimate for 2022 has increased around 4.4% while the same for first-quarter 2022 has gone up 15.3%. The favorable estimate revisions instill investor confidence in the stock.
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company (MOS - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Mosaic, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for MOS's current-year earnings has been revised 22.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 84% in a year.
AdvanSix, carrying a Zacks Rank #2, has an expected earnings growth rate of 20.8% for the current year. ASIX's consensus estimate for current-year earnings has been revised 15.7% upward in 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 gained around 29% in a year.
Commercial Metals, carrying a Zacks Rank #2, has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has gained around 30% in a year.
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Huntsman (HUN) Up 39% in 6 Months: What's Driving the Rally?
Huntsman Corporation’s (HUN - Free Report) shares have popped 39.1% over the past six months. The rally has resulted in the stock outperforming its industry’s decline of 4.4% over the same time frame. The chemical maker has also topped the S&P 500’s 5.9% decline over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #2 (Buy) stock.
Image Source: Zacks Investment Research
What’s Going in HUN’s Favor?
Strong fourth-quarter earnings performance and upbeat outlook have contributed to the rally in the company's shares. Huntsman’s adjusted earnings per share rose to 95 cents in the fourth quarter from 51 cents in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of 88 cents. Revenues climbed around 38% year over year to $2,307 million and surpassed the Zacks Consensus Estimate of $2,231.7 million. Huntsman witnessed higher sales across all segments and reaped the benefits of economic recovery, higher average selling prices and synergies arising from acquisitions.
The company recently announced an updated outlook for first-quarter 2022. It now anticipates adjusted EBITDA for the quarter to be at or greater than the high end of the earlier-announced guidance of $350-$380 million. It revised the guidance after reviewing February results and the developing business trends in March. The improved guidance is led by continued momentum in the Performance Products segment and to a lesser degree in Advanced Materials. In the Polyurethanes segment, headwinds in the European region are being masked by strength in North America and Asia.
Huntsman is benefiting from its investment in downstream businesses and differentiated product innovation. It remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.
The company's Polyurethanes segment is well positioned for strong upside in the long term on the back of its focus on ramping up its high-value differentiated downstream portfolio. Substitution of MDI for less effective materials will remain a key driving factor for the MDI business.
Huntsman should also gain from significant synergies of acquisitions. Its strong liquidity and balance sheet leverage gives it adequate flexibility to continue to develop and expand its core businesses through acquisitions and internal investments.
The company expects to deliver around $240 million of annualized cost optimization and acquisition run rate synergies by the end of 2023. It also remains on track with the integration of CVC Thermoset and Gabriel Performance Products acquisitions. Huntsman expects to achieve acquisitions-related run rate synergies of roughly $55 million by first-quarter 2023.
Earnings estimates for Huntsman have also been going up over the past two months. The Zacks Consensus Estimate for 2022 has increased around 4.4% while the same for first-quarter 2022 has gone up 15.3%. The favorable estimate revisions instill investor confidence in the stock.
Huntsman Corporation Price and Consensus
Huntsman Corporation price-consensus-chart | Huntsman Corporation Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company (MOS - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Mosaic, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for MOS's current-year earnings has been revised 22.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 84% in a year.
AdvanSix, carrying a Zacks Rank #2, has an expected earnings growth rate of 20.8% for the current year. ASIX's consensus estimate for current-year earnings has been revised 15.7% upward in 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 gained around 29% in a year.
Commercial Metals, carrying a Zacks Rank #2, has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has gained around 30% in a year.