We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Zacks Chemicals Specialty industry is weighed down by demand weakness, largely due to sluggishness in Europe and a slow economic recovery in China, as well as disruptions from tariffs. Margins of companies in this space also remain under pressure due to the still-elevated input, supply chain and logistics costs.
Industry players, such as Element Solutions Inc, Hawkins, Inc. and Ingevity Corp., are banking on strategic measures, including operating cost reductions, to tide over a persistently challenging environment.
About the Industry
The Zacks Chemicals Specialty industry consists of manufacturers of specialty chemical products for a host of end-use markets such as textile, paper, automotive, electronics, personal care, energy, construction, food & beverages and agriculture. These chemicals (including catalysts, surfactants, specialty polymers, coating additives, pesticides and oilfield chemicals) are used based on their performance and have a specific purpose.
Specialty chemicals can be single molecules or a combination of molecules referred to as formulations, and they provide a vast range of effects upon which various industries rely. Their compositions significantly influence the performance of the finished products. Specialty chemicals have applications in the manufacturing process of a vast range of products, including paints and coatings, cosmetics, petroleum products, inks and plastics.
What's Shaping the Future of the Chemical Specialty Industry?
Demand Weakness Pose Headwinds: Companies in the chemical specialty space are facing headwinds from demand softness in building and construction as well as industrial end markets, especially in Europe and China, due to economic slowdown. Elevated borrowing costs and inflation have taken a bite out of the residential construction industry. Manufacturing activities have also weakened amid softer demand for goods and higher borrowing costs.
A slower recovery in economic activities in China is hurting demand in that country. The prevailing geopolitical tension, low consumer confidence and high inflation have also dampened demand in Europe. While customer inventory de-stocking is essentially complete, some lingering impacts of the same in certain markets are expected to continue over the near term.
The recent imposition of hefty tariffs has also introduced significant headwinds for the chemical specialty industry. The soft demand conditions, exacerbated by the weak macroeconomic environment and tariff-induced impacts, are likely to weigh on the volumes of chemical specialty companies.
Cost Pressure Still a Concern: Specialty chemical makers are facing headwinds from raw material and energy cost inflation, and supply-chain and freight transportation disruptions. Some companies are exposed to challenges from elevated logistics and labor costs. While raw material costs have moderated lately, driven by easing supply-chain disruptions, they remain higher than the pre-pandemic levels. Tariffs have also led to increased costs for raw materials, resulting in higher production expenses for the industry players. The lingering impacts of inflationary pressures are expected to continue over the short term and weigh on the margins of chemical specialty companies.
Strategic Actions to Aid Results: The companies in this space are executing a raft of self-help measures — including cost-cutting and productivity improvement, expansion into high-growth markets, restructuring, operational efficiency improvement, and actions to strengthen the balance sheet and boost cash flows — in a bid to stay afloat amid the prevailing headwinds. The industry participants are aggressively implementing actions to cut costs. The measures are likely to help companies sail through the ongoing challenges.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Chemicals Specialty industry is part of the broader Zacks Basic Materials sector. It carries a Zacks Industry Rank #177, which places it in the bottom 28% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates a gloomy near-term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms S&P 500
The Zacks Chemicals Specialty industry has underperformed the Zacks S&P 500 composite while outperforming the broader Zacks Basic Materials sector year to date.
The industry has gained 6.8% over this period compared with the S&P 500’s rise of 9.5% and the broader sector’s increase of 14.3%.
Industry's Current Valuation
On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, which is a commonly used multiple for valuing chemical stocks, the industry is currently trading at 12.5X, below the S&P 500’s 17.71X and the sector’s 13.36X.
Over the past five years, the industry has traded as high as 14.65X, as low as 8.93X, with a median of 11.8X.
3 Chemical Specialty Stocks to Keep a Close Eye On
Hawkins: Minnesota-based Hawkins is a leading specialty chemical and ingredients company that formulates, distributes, blends and manufactures products for its customers. Hawkins is seeing strong growth in its Water Treatment segment, reflecting its strategic emphasis on the water treatment sector, including the successful integration of recent acquisitions.
The acquisition of Industrial Research Corporation aligns with Hawkins’ growth strategy in central and northern Louisiana, eastern Texas and southern Arkansas, complementing its existing operations and enhancing its market presence. The Wofford Water Service buyout also extended HWKN’s reach in Mississippi and supported its expansion in the southern United States, where its Water Treatment business had been limited previously.
The Amerochem assets and WaterSurplus acquisitions further strengthened its Water Treatment footprint. HWKN’s judicious pricing strategy to counter cost inflation is also supporting results. It also remains committed to enhancing shareholders’ value.
Hawkins, carrying a Zacks Rank #1 (Strong Buy), has expected earnings growth of 8.4% for the current fiscal year. HWKN also has an expected long-term earnings per share growth rate of 16%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Element Solutions: Florida-based Element Solutions is a leading specialty chemicals provider, offering innovative and differentiated solutions to its customers across a vast spectrum of industries. ESI is poised for growth, driven by strong execution and strategic positioning in the electronics sector, which underpins its robust long-term growth outlook.
The company is benefiting from the strength in the electronics market. It is seeing strong organic growth in its Electronics segment, offsetting weakness in the industrial space. High-value end markets are contributing to a favorable product mix, while ongoing pricing and productivity initiatives and lower raw material costs are boosting margins.
The Zacks Consensus Estimate for Element Solutions’ earnings for the current year has moved 2.1% upward over the last 60 days. ESI surpassed the Zacks Consensus Estimate in three of the trailing four quarters. It has a trailing four-quarter earnings surprise of roughly 2.1%, on average. ESI currently carries a Zacks Rank #2 (Buy).
Ingevity: South Carolina-based Ingevity is a global producer of high-performance activated carbon materials and specialty chemicals. The company is expected to benefit from the repositioning of its Performance Chemicals segment, which aims to lower exposure to lower-margin end markets.
Operational improvements leading to lower input costs and better manufacturing efficiency are also aiding performance in its Performance Materials unit. Ingevity is taking several actions to expand capacity and drive long-term growth. The acquisition of Ozark Materials has also strengthened the company’s position in the paving construction industry.
Ingevity has expected earnings growth of 15.4% for the current year. It surpassed the Zacks Consensus Estimate in three of the trailing four quarters. It has a trailing four-quarter earnings surprise of roughly 270.4%, on average. NGVT carries a Zacks Rank #3 (Hold).
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Industry Outlook Highlights Element Solutions, Hawkins and Ingevity
For Immediate Release
Chicago, IL – August 21, 2025 – Today, Zacks Equity Research discusses Element Solutions Inc (ESI - Free Report) , Hawkins, Inc. (HWKN - Free Report) and Ingevity Corp. (NGVT - Free Report) .
Industry: Specialty Chemical
Link: https://www.zacks.com/commentary/2739280/3-chemical-specialty-stocks-to-watch-amid-industry-challenges
The Zacks Chemicals Specialty industry is weighed down by demand weakness, largely due to sluggishness in Europe and a slow economic recovery in China, as well as disruptions from tariffs. Margins of companies in this space also remain under pressure due to the still-elevated input, supply chain and logistics costs.
Industry players, such as Element Solutions Inc, Hawkins, Inc. and Ingevity Corp., are banking on strategic measures, including operating cost reductions, to tide over a persistently challenging environment.
About the Industry
The Zacks Chemicals Specialty industry consists of manufacturers of specialty chemical products for a host of end-use markets such as textile, paper, automotive, electronics, personal care, energy, construction, food & beverages and agriculture. These chemicals (including catalysts, surfactants, specialty polymers, coating additives, pesticides and oilfield chemicals) are used based on their performance and have a specific purpose.
Specialty chemicals can be single molecules or a combination of molecules referred to as formulations, and they provide a vast range of effects upon which various industries rely. Their compositions significantly influence the performance of the finished products. Specialty chemicals have applications in the manufacturing process of a vast range of products, including paints and coatings, cosmetics, petroleum products, inks and plastics.
What's Shaping the Future of the Chemical Specialty Industry?
Demand Weakness Pose Headwinds: Companies in the chemical specialty space are facing headwinds from demand softness in building and construction as well as industrial end markets, especially in Europe and China, due to economic slowdown. Elevated borrowing costs and inflation have taken a bite out of the residential construction industry. Manufacturing activities have also weakened amid softer demand for goods and higher borrowing costs.
A slower recovery in economic activities in China is hurting demand in that country. The prevailing geopolitical tension, low consumer confidence and high inflation have also dampened demand in Europe. While customer inventory de-stocking is essentially complete, some lingering impacts of the same in certain markets are expected to continue over the near term.
The recent imposition of hefty tariffs has also introduced significant headwinds for the chemical specialty industry. The soft demand conditions, exacerbated by the weak macroeconomic environment and tariff-induced impacts, are likely to weigh on the volumes of chemical specialty companies.
Cost Pressure Still a Concern: Specialty chemical makers are facing headwinds from raw material and energy cost inflation, and supply-chain and freight transportation disruptions. Some companies are exposed to challenges from elevated logistics and labor costs. While raw material costs have moderated lately, driven by easing supply-chain disruptions, they remain higher than the pre-pandemic levels. Tariffs have also led to increased costs for raw materials, resulting in higher production expenses for the industry players. The lingering impacts of inflationary pressures are expected to continue over the short term and weigh on the margins of chemical specialty companies.
Strategic Actions to Aid Results: The companies in this space are executing a raft of self-help measures — including cost-cutting and productivity improvement, expansion into high-growth markets, restructuring, operational efficiency improvement, and actions to strengthen the balance sheet and boost cash flows — in a bid to stay afloat amid the prevailing headwinds. The industry participants are aggressively implementing actions to cut costs. The measures are likely to help companies sail through the ongoing challenges.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Chemicals Specialty industry is part of the broader Zacks Basic Materials sector. It carries a Zacks Industry Rank #177, which places it in the bottom 28% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates a gloomy near-term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms S&P 500
The Zacks Chemicals Specialty industry has underperformed the Zacks S&P 500 composite while outperforming the broader Zacks Basic Materials sector year to date.
The industry has gained 6.8% over this period compared with the S&P 500’s rise of 9.5% and the broader sector’s increase of 14.3%.
Industry's Current Valuation
On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, which is a commonly used multiple for valuing chemical stocks, the industry is currently trading at 12.5X, below the S&P 500’s 17.71X and the sector’s 13.36X.
Over the past five years, the industry has traded as high as 14.65X, as low as 8.93X, with a median of 11.8X.
3 Chemical Specialty Stocks to Keep a Close Eye On
Hawkins: Minnesota-based Hawkins is a leading specialty chemical and ingredients company that formulates, distributes, blends and manufactures products for its customers. Hawkins is seeing strong growth in its Water Treatment segment, reflecting its strategic emphasis on the water treatment sector, including the successful integration of recent acquisitions.
The acquisition of Industrial Research Corporation aligns with Hawkins’ growth strategy in central and northern Louisiana, eastern Texas and southern Arkansas, complementing its existing operations and enhancing its market presence. The Wofford Water Service buyout also extended HWKN’s reach in Mississippi and supported its expansion in the southern United States, where its Water Treatment business had been limited previously.
The Amerochem assets and WaterSurplus acquisitions further strengthened its Water Treatment footprint. HWKN’s judicious pricing strategy to counter cost inflation is also supporting results. It also remains committed to enhancing shareholders’ value.
Hawkins, carrying a Zacks Rank #1 (Strong Buy), has expected earnings growth of 8.4% for the current fiscal year. HWKN also has an expected long-term earnings per share growth rate of 16%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Element Solutions: Florida-based Element Solutions is a leading specialty chemicals provider, offering innovative and differentiated solutions to its customers across a vast spectrum of industries. ESI is poised for growth, driven by strong execution and strategic positioning in the electronics sector, which underpins its robust long-term growth outlook.
The company is benefiting from the strength in the electronics market. It is seeing strong organic growth in its Electronics segment, offsetting weakness in the industrial space. High-value end markets are contributing to a favorable product mix, while ongoing pricing and productivity initiatives and lower raw material costs are boosting margins.
The Zacks Consensus Estimate for Element Solutions’ earnings for the current year has moved 2.1% upward over the last 60 days. ESI surpassed the Zacks Consensus Estimate in three of the trailing four quarters. It has a trailing four-quarter earnings surprise of roughly 2.1%, on average. ESI currently carries a Zacks Rank #2 (Buy).
Ingevity: South Carolina-based Ingevity is a global producer of high-performance activated carbon materials and specialty chemicals. The company is expected to benefit from the repositioning of its Performance Chemicals segment, which aims to lower exposure to lower-margin end markets.
Operational improvements leading to lower input costs and better manufacturing efficiency are also aiding performance in its Performance Materials unit. Ingevity is taking several actions to expand capacity and drive long-term growth. The acquisition of Ozark Materials has also strengthened the company’s position in the paving construction industry.
Ingevity has expected earnings growth of 15.4% for the current year. It surpassed the Zacks Consensus Estimate in three of the trailing four quarters. It has a trailing four-quarter earnings surprise of roughly 270.4%, on average. NGVT carries a Zacks Rank #3 (Hold).
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.