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4 Reasons to Add Kraton Corp (KRA) Stock to Your Portfolio
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Kraton Corporation’s stock looks promising at the moment. The chemical maker, currently carrying a Zacks Rank #1 (Strong Buy), has seen its shares rise roughly 11.5% year to date. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
What’s Working in Favor of Kraton?
Estimates Northbound: Annual estimates for Kraton have moved north over the past 60 days, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2017 has increased by around 7.6% to $2.13 per share. The Zacks Consensus Estimate for 2018 has also moved up 15.6% over the same timeframe to $3.34.
An Outperformer: Kraton has outperformed the Zacks categorized Chemical-Specialty industry over the past three months. The company’s shares have gained around 18% over this period, compared with roughly 2.9% gain recorded by the industry.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Kraton is currently trading at trailing 12-month EV/EBITDA multiple of 7.44, cheaper compared with the industry average of 23.92.
Growth Drivers: Kraton remains committed to steer organic growth in key markets through state-of-the-art innovation and infrastructure. The company, last month, announced the opening of a hydrogenated styrenic block copolymer (HSBC) plant in Mailiao, Taiwan. The plant will boost the company’s innovation-grade business, especially low molecular weight HSBC products. It will also help Kraton to effectively serve the growing export and Asian markets through higher production capacity of varied grades of HSBC products.
Kraton should also gain from its efforts to reduce costs and debt. The company is making a good progress in its cost reduction initiatives and has achieved $68 million of cost savings in 2016 and another $13 million in the first quarter of 2017. It expects to realize an additional $27 million in cost reductions in the remainder of 2017. Kraton remains on track to deliver $135 million of cost reductions by 2018. The company also plans to cut net debt by $100-$150 million in 2017.
Kraton has also implemented price hikes to address raw material cost inflation and expects full realization of price increases in second-quarter 2017, which will support polymer margins in the quarter.
Huntsman has an expected long-term earnings growth of 7%.
BASF has an expected long-term earnings growth of 8.9%.
Chemours has an expected long-term earnings growth of 15.5%.
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4 Reasons to Add Kraton Corp (KRA) Stock to Your Portfolio
Kraton Corporation’s stock looks promising at the moment. The chemical maker, currently carrying a Zacks Rank #1 (Strong Buy), has seen its shares rise roughly 11.5% year to date. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
What’s Working in Favor of Kraton?
Estimates Northbound: Annual estimates for Kraton have moved north over the past 60 days, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2017 has increased by around 7.6% to $2.13 per share. The Zacks Consensus Estimate for 2018 has also moved up 15.6% over the same timeframe to $3.34.
An Outperformer: Kraton has outperformed the Zacks categorized Chemical-Specialty industry over the past three months. The company’s shares have gained around 18% over this period, compared with roughly 2.9% gain recorded by the industry.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Kraton is currently trading at trailing 12-month EV/EBITDA multiple of 7.44, cheaper compared with the industry average of 23.92.
Growth Drivers: Kraton remains committed to steer organic growth in key markets through state-of-the-art innovation and infrastructure. The company, last month, announced the opening of a hydrogenated styrenic block copolymer (HSBC) plant in Mailiao, Taiwan. The plant will boost the company’s innovation-grade business, especially low molecular weight HSBC products. It will also help Kraton to effectively serve the growing export and Asian markets through higher production capacity of varied grades of HSBC products.
Kraton should also gain from its efforts to reduce costs and debt. The company is making a good progress in its cost reduction initiatives and has achieved $68 million of cost savings in 2016 and another $13 million in the first quarter of 2017. It expects to realize an additional $27 million in cost reductions in the remainder of 2017. Kraton remains on track to deliver $135 million of cost reductions by 2018. The company also plans to cut net debt by $100-$150 million in 2017.
Kraton has also implemented price hikes to address raw material cost inflation and expects full realization of price increases in second-quarter 2017, which will support polymer margins in the quarter.
Kraton Corporation Price and Consensus
Kraton Corporation Price and Consensus | Kraton Corporation Quote
Other Stocks to Consider
Other top-ranked stocks in the chemical space include Huntsman Corporation (HUN - Free Report) , BASF SE (BASFY - Free Report) and The Chemours Company (CC - Free Report) , all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntsman has an expected long-term earnings growth of 7%.
BASF has an expected long-term earnings growth of 8.9%.
Chemours has an expected long-term earnings growth of 15.5%.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy...
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>