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Ashland (ASH) Shares Up 17% in 6 Months: What's Driving It?
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Ashland Inc.'s (ASH - Free Report) shares have gained 17.2% over the past six months. The rally has resulted in the stock outperforming its industry’s decline of 2.6% over the same time frame. The company has also topped the S&P 500’s 5.8% 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 ASH’s Favor?
Better-than-expected earnings performance in the fiscal third quarter and upbeat outlook have contributed to the gain in the company's shares. The company’s adjusted earnings for the third quarter of fiscal 2022 of $1.89 per share rose from the year-ago quarter’s figure of 98 cents. It also topped the Zacks Consensus Estimate of $1.88.
Sales climbed around 19% year over year to $644 million, and beat the Zacks Consensus Estimate of $643.9 million. The top line was driven by disciplined pricing actions leading to a recovery in costs in a high-inflation environment as well as better product mix. The company witnessed a double-digit year over year sales growth across its segments in the quarter.
Ashland expects sales in the range of $2.35-$2.4 billion for fiscal 2022, representing around 13% year-over-year growth at the mid-point. It also anticipates adjusted EBITDA between $580 million and $590 million, representing around 18% year-over-year growth at the mid-point.
The company is benefiting from strong demand in its end markets. Its industrial businesses are witnessing strong demand recovery. Ashland is seeing higher demand across core personal-care end markets. The company, in its fiscal third quarter call, noted that it sees underlying demand to remain strong for its focused ingredients and additives product portfolio in the near term. The company is also gaining from the contributions from the Schulke & Mayr acquisition.
Ashland’s restructuring actions have also provided it with a profitable, high-margin portfolio focused on high-quality markets and better positioned it for future growth. The company is also taking a number of actions including reduction of operating costs to boost profitability. Cost-reduction measures are expected to support its margins in fiscal 2022. The company’s pricing and mix improvement actions are also helping it to counter the current inflation.
Ashland also remains committed to boosting its cash flows and returning value to shareholders. The company remains focused on expanding margins and improving free cash flow conversion. ASH, in May 2022, raised its quarterly cash dividend by 12% to 33.5 cents per share. The company’s board also authorized a new, evergreen $500-million common stock repurchase program. The new authorization discontinues and replaces Ashland’s 2018 $1-billion share buyback program.
Other top-ranked stocks worth considering in the basic materials space include Daqo New Energy Corp. (DQ - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and The Chemours Company (CC - Free Report) .
Daqo New Energy, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 177.5% for the current year. The Zacks Consensus Estimate for DQ's earnings for the current fiscal has been revised 20.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Daqo New Energy’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 10.8%. DQ has gained around 11% over a year.
Sociedad has a projected earnings growth rate of 520.5% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 34% upward in the past 60 days.
Sociedad’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average being 28.2%. SQM has rallied roughly 101% in a year. The company carries a Zacks Rank #2.
Chemours has a projected earnings growth rate of 40% for the current year. The Zacks Consensus Estimate for CC's current-year earnings has been revised 7.3% upward in the past 60 days.
Chemours’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 28.3%, on average. CC has gained around 6% in a year and currently carries a Zacks Rank #2.
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Ashland (ASH) Shares Up 17% in 6 Months: What's Driving It?
Ashland Inc.'s (ASH - Free Report) shares have gained 17.2% over the past six months. The rally has resulted in the stock outperforming its industry’s decline of 2.6% over the same time frame. The company has also topped the S&P 500’s 5.8% 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 ASH’s Favor?
Better-than-expected earnings performance in the fiscal third quarter and upbeat outlook have contributed to the gain in the company's shares. The company’s adjusted earnings for the third quarter of fiscal 2022 of $1.89 per share rose from the year-ago quarter’s figure of 98 cents. It also topped the Zacks Consensus Estimate of $1.88.
Sales climbed around 19% year over year to $644 million, and beat the Zacks Consensus Estimate of $643.9 million. The top line was driven by disciplined pricing actions leading to a recovery in costs in a high-inflation environment as well as better product mix. The company witnessed a double-digit year over year sales growth across its segments in the quarter.
Ashland expects sales in the range of $2.35-$2.4 billion for fiscal 2022, representing around 13% year-over-year growth at the mid-point. It also anticipates adjusted EBITDA between $580 million and $590 million, representing around 18% year-over-year growth at the mid-point.
The company is benefiting from strong demand in its end markets. Its industrial businesses are witnessing strong demand recovery. Ashland is seeing higher demand across core personal-care end markets. The company, in its fiscal third quarter call, noted that it sees underlying demand to remain strong for its focused ingredients and additives product portfolio in the near term. The company is also gaining from the contributions from the Schulke & Mayr acquisition.
Ashland’s restructuring actions have also provided it with a profitable, high-margin portfolio focused on high-quality markets and better positioned it for future growth. The company is also taking a number of actions including reduction of operating costs to boost profitability. Cost-reduction measures are expected to support its margins in fiscal 2022. The company’s pricing and mix improvement actions are also helping it to counter the current inflation.
Ashland also remains committed to boosting its cash flows and returning value to shareholders. The company remains focused on expanding margins and improving free cash flow conversion. ASH, in May 2022, raised its quarterly cash dividend by 12% to 33.5 cents per share. The company’s board also authorized a new, evergreen $500-million common stock repurchase program. The new authorization discontinues and replaces Ashland’s 2018 $1-billion share buyback program.
Ashland Inc. Price and Consensus
Ashland Inc. price-consensus-chart | Ashland Inc. Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Daqo New Energy Corp. (DQ - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and The Chemours Company (CC - Free Report) .
Daqo New Energy, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 177.5% for the current year. The Zacks Consensus Estimate for DQ's earnings for the current fiscal has been revised 20.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Daqo New Energy’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 10.8%. DQ has gained around 11% over a year.
Sociedad has a projected earnings growth rate of 520.5% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 34% upward in the past 60 days.
Sociedad’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average being 28.2%. SQM has rallied roughly 101% in a year. The company carries a Zacks Rank #2.
Chemours has a projected earnings growth rate of 40% for the current year. The Zacks Consensus Estimate for CC's current-year earnings has been revised 7.3% upward in the past 60 days.
Chemours’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 28.3%, on average. CC has gained around 6% in a year and currently carries a Zacks Rank #2.