Koppers Holdings Inc.’s (KOP - Free Report) stock looks promising at the moment. 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.
Let’s delve deeper into the factors that make this chemical company an attractive investment option.
What’s Working in Favor of Koppers?
Solid Rank & VGM Score: Koppers currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Positive Earnings Surprise History: Koppers has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 59.7%.
An Outperformer: Koppers has outperformed the industry it belongs to over the past six months, partly reflecting its forecast-topping earnings performance. The company’s shares have gained 41.4% over this period, compared with roughly 15.9% gain recorded by the industry.
Solid Growth Prospects: The Zacks Consensus Estimate for earnings for 2017 for Koppers is currently pegged at $3.75 per share, reflecting an expected year-over-year growth of 44.2%. The stock also has a long-term expected earnings per share growth rate of roughly 18%, higher than the industry average of 9.9%.
Superior Return on Equity (ROE): Koppers’ ROE of 119.1%, as compared with the industry average of 11.2%, manifests the company’s efficiency in utilizing shareholder’s funds.
Upbeat Outlook: Koppers, last month, raised its earnings outlook for 2017 factoring in solid performance year to date. The company now sees adjusted earnings in the range of $3.70 to $3.80 per share for 2017, up from its prior view of $3.10 to $3.30 per share. The revision is partly due to lower than expected effective tax rate.
The company also raised its adjusted EBITDA forecast for 2017 to around $195 million from roughly $185 million expected earlier. The guidance also reflects an increase from $174 million recorded in the prior year.
Koppers is expected to gain from sustained strong performance of its Carbon Materials and Chemicals (CMC) and Performance Chemicals (PC) units in the balance of 2017. The CMC unit is gaining from favorable market conditions and savings benefits from the company’s restructuring actions.
While the PC division faces headwinds from raw material cost inflation, it is likely to gain from continued strong demand. The unit is expected to benefit from positive trends in the repair and remodeling market.
Other Stocks to Consider
Other top-ranked companies in the basic materials space include Ingevity Corporation (NGVT - Free Report) , Kronos Worldwide, Inc. (KRO - Free Report) and Kraton Corporation (KRA - Free Report) , all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 41% year to date.
Kronos has an expected long-term earnings growth of 5%. The stock has gained around 128.3% year to date.
Kraton has an expected earnings growth of 25.4% for the current year. Its shares are up roughly 61% year to date.
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