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Here's Why You Should Hold Onto Huntsman (HUN) Stock for Now
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Huntsman Corporation (HUN - Free Report) is expected to benefit from its investment in downstream businesses and differentiated product innovation as well as strategic acquisitions amid certain headwinds including higher raw material and logistical costs.
The company’s shares are up 25.6% over a year, compared with the 3.3% rise of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding HUN?
Huntsman 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.
A Few Headwinds
The company faces headwinds from a spike in raw materials and logistical and supply-chain costs. Supply disruptions have led to a rise in raw material costs. Unfavorable impacts from higher costs of raw materials are expected to continue in the first quarter of 2022. Huntsman is expected to face headwinds from higher gas and electricity prices in Europe in the quarter. As such, higher raw material costs may impact Polyurethanes margins.
Huntsman’s Advanced Materials unit is still exposed to softness in the aerospace markets. The pandemic is still impacting international travel. Despite a recovery of late, some weakness in aerospace is expected to continue in the near term.
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Nutrien, sporting a Zacks Rank #1, has an expected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 37.8% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 60.3%, on average. NTR has rallied around 82% in a year.
AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 64.9% for the current year. ASIX's consensus estimate for current-year earnings has been revised 53% 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 rallied around 84% in a year.
Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 114.7% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 35.1% 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 13.7%, on average. CMC has gained around 32% in a year.
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Here's Why You Should Hold Onto Huntsman (HUN) Stock for Now
Huntsman Corporation (HUN - Free Report) is expected to benefit from its investment in downstream businesses and differentiated product innovation as well as strategic acquisitions amid certain headwinds including higher raw material and logistical costs.
The company’s shares are up 25.6% over a year, compared with the 3.3% rise of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding HUN?
Huntsman 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.
A Few Headwinds
The company faces headwinds from a spike in raw materials and logistical and supply-chain costs. Supply disruptions have led to a rise in raw material costs. Unfavorable impacts from higher costs of raw materials are expected to continue in the first quarter of 2022. Huntsman is expected to face headwinds from higher gas and electricity prices in Europe in the quarter. As such, higher raw material costs may impact Polyurethanes margins.
Huntsman’s Advanced Materials unit is still exposed to softness in the aerospace markets. The pandemic is still impacting international travel. Despite a recovery of late, some weakness in aerospace is expected to continue in the near term.
Huntsman Corporation Price and Consensus
Huntsman Corporation price-consensus-chart | Huntsman Corporation Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Nutrien, sporting a Zacks Rank #1, has an expected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 37.8% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 60.3%, on average. NTR has rallied around 82% in a year.
AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 64.9% for the current year. ASIX's consensus estimate for current-year earnings has been revised 53% 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 rallied around 84% in a year.
Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 114.7% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 35.1% 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 13.7%, on average. CMC has gained around 32% in a year.