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Why Is Ashland (ASH) Up 0.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Ashland (ASH - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.

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

Ashland's Q1 Earnings Beat Estimates, Revenues Miss

Ashland recorded first-quarter fiscal 2024 (ending Dec 31, 2023) adjusted earnings of 45 cents per share, down from 97 cents in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate of 21 cents.

Sales declined by 9.9% year over year to $473 million, falling short of the Zacks Consensus Estimate of $478.4 million. The decline is attributed to weaker volumes, partly offset by improved pricing within the Life Sciences and Personal Care segments.

Segment Highlights

Life Sciences: Sales in the segment fell 3% from the prior year to $200 million in the reported quarter, missing the Zacks Consensus Estimate of $203 million. Sustained pricing gains were offset by normalized supply in the pharmaceutical market amidst declining demand, while nutrition end-market volumes continued to face challenges.

Personal Care: Sales in the division fell 7% year over year to $129 million, missing Zacks Consensus Estimate of $131 million. Higher volumes in hair care were more than offset by lower volumes in skin care and oral care, resulting in an overall offset to sustained pricing.

Specialty Additives: Sales in the segment fell 15% year over year to $122 million, missing the Zacks Consensus Estimate of $127 million, attributed to the continued impacts of decreased volumes in fiscal 2023 and lower pricing in architectural coatings.

Top of Form

Intermediates: Sales in the segment dropped 39% year over year to $33 million, below the Zacks Consensus Estimate of $36.1 million, driven by reduced pricing and volumes for both merchant and captive sales.

Financials

Operating activities generated $201 million in cash flows in the first quarter. Ongoing free cash flow was $66 million in the quarter.

Outlook

Ashland forecasts adjusted EBITDA between $115 million and $125 million for the second quarter of fiscal 2024, with anticipated sales ranging from $565 million to $585 million. For the year 2024, sales are expected to be between $2.15 billion and $2.25 billion, while adjusted EBITDA is projected to be in the range of $460-$500 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 12.37% due to these changes.

VGM Scores

At this time, Ashland has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ashland has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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