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Why Is Ashland (ASH) Down 6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Ashland (ASH - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ashland due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Ashland's Earnings and Revenues Lag Estimates in Q2

Ashland recorded profits of $91 million or $1.67 per share in the second quarter of fiscal 2023 (ending Mar 31, 2023), down from $786 million or $13.69 in the prior-year quarter.

Barring one-time items, adjusted earnings came in at $1.43 per share, down from the year-ago quarter’s figure of $1.50. The bottom line missed the Zacks Consensus Estimate of $1.53.

Sales were flat year over year at $603 million. The top line missed the Zacks Consensus Estimate of $632.5 million. Sales were supported by disciplined pricing actions leading to a recovery in costs as well as strong demand for pharmaceutical ingredients, offset by demand weakness in personal care and specialty additives and customer inventory destocking.

Segment Highlights

Life Sciences: Sales in the segment were up 18% year over year to $240 million in the reported quarter, aided by double-digit growth to pharmaceutical customers reflecting cost recovery and strong demand.

Personal Care: Sales in the division fell 3% year over year to $167 million. Disciplined pricing was offset by inventory destocking and unfavorable currency impact.
Specialty Additives: Sales in the segment fell 12% year over year to $161 million, hurt by the inventory destocking that more than offset sustained inflation recovery.

Intermediates: Sales in the segment went down 23% year over year to $51 million, impacted by reduced volumes of merchant derivatives.


Cash and cash equivalents were $399 million at the end of the quarter, down around 59% year over year. Long-term debt was $1,328 million, down around 0.6% year over year.

Cash flows used by operating activities were $56 million in the reported quarter, increasing from $16 million in the prior-year quarter.


Ashland initiated actions to reduce inventories in certain product lines for impacted end markets in April, factoring in continued customer destocking and external uncertainties for the second half of fiscal 2023. The company expects these actions to unfavorably impact its adjusted EBITDA in the second half of the fiscal by roughly $20 million.

The company now expects sales for fiscal 2023 to be in the range of $2.3-$2.4 billion, reflecting softer global demand. It also expects adjusted EBITDA to be in the range of $580-$610 million, factoring in weaker global demand and the inventory-control actions.


How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -8.58% due to these changes.

VGM Scores

At this time, Ashland has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ashland has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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