The Chemours Company’s (CC - 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 Makes Chemours an Attractive Pick?
Solid Rank & VGM Score: Chemours 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.
An Outperformer: Chemours has outperformed the industry it belongs to over a year. The company’s shares have gained 22.4% compared with roughly 12.4% rise 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, Chemours is currently trading at trailing 12-month EV/EBITDA multiple of 8.1, cheaper compared with the industry average of 12.7.
Strong Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Chemours is currently pegged at $5.69, reflecting an expected year-over-year growth of 48.9%. Moreover, earnings are expected to register a 77% growth in second-quarter 2018. The company also has an expected long-term earnings per share growth of 15.5%, higher than the industry average of 9.8%.
Positive Earnings Surprise History: Chemours has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 11.9%.
Superior Return on Equity (ROE): Chemours’ ROE of 107.9%, as compared with the industry average of 9.3%, manifests the company’s efficiency in utilizing shareholder’s funds.
Solid Q1 and Upbeat Prospects: Chemours saw its profits surge 98% year over year in the first quarter of 2018. Adjusted earnings for the quarter of $1.41 per share topped the Zacks Consensus Estimate of $1.23.
Revenues climbed 20% year over year to $1,730 million and surpassed the Zacks Consensus Estimate of $1678 million. The company saw higher volume across all segments. The top line was also driven by higher global average prices in Titanium Technologies and favorable currency impact.
The company’s adjusted EBITDA also jumped 64% year over year to $468 million on the back of higher global average price for Ti-Pure titanium dioxide (TiO2) and volume gains across all segments.
Factoring in solid first-quarter results and visibility into the balance of 2018, Chemours expects that adjusted EBITDA for 2018 will be at the top end of its earlier announced range of $1.7-$1.85 billion driven by sustained positive momentum across its businesses.
Chemours also expects to deliver further margin expansion throughout the balance of 2018. The company also anticipates to deliver more than $700 million in free cash flow in 2018.
Chemours is gaining from healthy demand for Ti-Pure TiO2, sustained adoption of Opteon refrigerant and higher demand for fluoropolymers products. Higher adoption of Ti-Pure TiO2 products is driving results in the company’s Titanium Technologies division as witnessed in the first quarter. Chemours should also gain from favorable pricing and demand in the Fluoroproducts segment in 2018.
Moreover, Chemours completed its acquisition of ICOR International in April 2018. The buyout boosts its refrigerant portfolio and expands its channel access across its markets.
Other Stocks to Consider
Other top-ranked stocks in the basic materials space worth considering include Westlake Chemical Corporation (WLK - Free Report) , Huntsman Corporation (HUN - Free Report) and Celanese Corporation (CE - Free Report) , each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have gained roughly 89% over a year.
Huntsman has an expected long-term earnings growth rate of 8.3%. The company’s shares have rallied around 30% in a year.
Celanese has an expected long-term earnings growth rate of 8.9%. Its shares have rallied roughly 31% over a year.
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