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Here's What Makes Koppers (KOP) Stock a Solid Choice Right Now
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Koppers Holdings Inc. (KOP - Free Report) experienced a 23.8% increase in its stock value in the last three months, driven by upbeat guidance and strong third-quarter performance.
The stock offers an attractive investment opportunity with strong growth prospects, as reflected in its Zacks Rank #2 (Buy).
Positive Earnings Surprise History
Koppers outperformed the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter average earnings surprise of 22.3%.
Healthy Growth Potential
The 2023 Zacks Consensus Estimate is pegged at $4.48, indicating an 8.2% increase from the previous year’s levels. Further, earnings are expected to suggest 4.9% growth in 2024.
Estimates Northbound
The Zacks Consensus Estimate for Koppers for 2023 has increased by around 0.7% in the past two months. The consensus estimate for 2024 has also been revised upward by 1.1% over the same time frame.
An Outperformer
Shares of Koppers are up 61% in the past year compared with the industry’s fall of 10.1% in the same period.
Image Source: Zacks Investment Research
Attractive Valuation
Valuation looks attractive as KOP’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Koppers is currently trading at a trailing 12-month EV/EBITDA multiple of 7.13, cheaper compared with the industry average of 10.52.
What’s Driving Koppers?
In the third quarter, Koppers experienced a remarkable 34% surge in earnings from the previous year’s levels, reaching $1.22 per share. Quarterly revenues demonstrated 3% year-over-year growth.
The outstanding performance was primarily driven by the Railroad and Utility Products and Services (RUPS) business, which saw an impressive 13% increase in sales, totaling $234 million. The upside was led by pricing hikes and increased volumes for crossties, with record sales and profitability achieved in the domestic utility pole business.
The Performance Chemicals (PC) segment also played a significant role in Koppers' strong results, contributing to sales of $179.4 million in the quarter — up 17% year over year. This segment's positive results were fueled by the renegotiation of customer contracts, allowing necessary price adjustments to address higher raw material and operating costs experienced in the previous year.
Koppers provided a robust outlook for 2023, forecasting sales of approximately $2.1 billion. The company also anticipates adjusted EBITDA to be in the range of $253-$257 million for the year. Confidence in sustained profitability and growth is reflected in the projected adjusted earnings per share for 2023 in the range of $4.35-$4.55.
The Zacks Consensus Estimate for LEU’s current-year earnings has been revised upward by 30.5% in the past 60 days. LEU beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 47.7%. The company’s shares have increased 42.1% in the past year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 53 cents, indicating a year-over-year surge of 89.3%. AGI beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have rallied 21.5% in the past year.
The consensus estimate for KWR’s current fiscal year earnings is pegged at $7.53, indicating a year-over-year surge of 28.3%. KWR has a trailing four-quarter earnings surprise of roughly 16.7%, on average. KWR’s shares have increased 14.2% in a year.
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Here's What Makes Koppers (KOP) Stock a Solid Choice Right Now
Koppers Holdings Inc. (KOP - Free Report) experienced a 23.8% increase in its stock value in the last three months, driven by upbeat guidance and strong third-quarter performance.
Koppers Holdings Inc. Price and Consensus
Koppers Holdings Inc. price-consensus-chart | Koppers Holdings Inc. Quote
The stock offers an attractive investment opportunity with strong growth prospects, as reflected in its Zacks Rank #2 (Buy).
Positive Earnings Surprise History
Koppers outperformed the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter average earnings surprise of 22.3%.
Healthy Growth Potential
The 2023 Zacks Consensus Estimate is pegged at $4.48, indicating an 8.2% increase from the previous year’s levels. Further, earnings are expected to suggest 4.9% growth in 2024.
Estimates Northbound
The Zacks Consensus Estimate for Koppers for 2023 has increased by around 0.7% in the past two months. The consensus estimate for 2024 has also been revised upward by 1.1% over the same time frame.
An Outperformer
Shares of Koppers are up 61% in the past year compared with the industry’s fall of 10.1% in the same period.
Image Source: Zacks Investment Research
Attractive Valuation
Valuation looks attractive as KOP’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Koppers is currently trading at a trailing 12-month EV/EBITDA multiple of 7.13, cheaper compared with the industry average of 10.52.
What’s Driving Koppers?
In the third quarter, Koppers experienced a remarkable 34% surge in earnings from the previous year’s levels, reaching $1.22 per share. Quarterly revenues demonstrated 3% year-over-year growth.
The outstanding performance was primarily driven by the Railroad and Utility Products and Services (RUPS) business, which saw an impressive 13% increase in sales, totaling $234 million. The upside was led by pricing hikes and increased volumes for crossties, with record sales and profitability achieved in the domestic utility pole business.
The Performance Chemicals (PC) segment also played a significant role in Koppers' strong results, contributing to sales of $179.4 million in the quarter — up 17% year over year. This segment's positive results were fueled by the renegotiation of customer contracts, allowing necessary price adjustments to address higher raw material and operating costs experienced in the previous year.
Koppers provided a robust outlook for 2023, forecasting sales of approximately $2.1 billion. The company also anticipates adjusted EBITDA to be in the range of $253-$257 million for the year. Confidence in sustained profitability and growth is reflected in the projected adjusted earnings per share for 2023 in the range of $4.35-$4.55.
Zacks Rank & Other Key Picks
Some other top-ranked stocks in the Basic Materials space are Centrus Energy Corp. (LEU - Free Report) , sporting a Zacks Rank #1 (Strong Buy) at present and Alamos Gold Inc. (AGI - Free Report) and Quaker Chemical Corporation (KWR - Free Report) , each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LEU’s current-year earnings has been revised upward by 30.5% in the past 60 days. LEU beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 47.7%. The company’s shares have increased 42.1% in the past year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 53 cents, indicating a year-over-year surge of 89.3%. AGI beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have rallied 21.5% in the past year.
The consensus estimate for KWR’s current fiscal year earnings is pegged at $7.53, indicating a year-over-year surge of 28.3%. KWR has a trailing four-quarter earnings surprise of roughly 16.7%, on average. KWR’s shares have increased 14.2% in a year.