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Why Is Huntsman (HUN) Down 2.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Huntsman (HUN - Free Report) . Shares have lost about 2.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Huntsman due for a breakout? 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.

Huntsman's Earnings and Revenues Top Estimates in Q2

Huntsman logged a profit of $623 million or $1.71 per share in second-quarter 2018, a more than three-fold surge from $183 million or 69 cents recorded a year ago.

Barring one-time items, adjusted earnings were $1.01 per share for the quarter, which topped the Zacks Consensus Estimate of 87 cents.

Huntsman reported revenues of $2,404 million, up around 17% year over year. The figure also beat the Zacks Consensus Estimate of $2,276 million. The results were driven by strong performance across the company's businesses.

Segment Highlights

Polyurethanes: Revenues for the segment jumped around 28% year over year to $1,313 million on the back of higher average selling price and sales volumes.

Performance Products: Revenues for the unit went up 6% to $593 million, driven by higher selling prices.

Advanced Materials: Revenues for the unit increased around 12% to $292 million on the back of higher average selling prices and volumes.

Textile Effects: Revenues for the division went up around 11% to $227 million on the back of volume growth and higher selling prices.

Financials

Huntsman generated free cash flow of $174 million during the quarter, up 13% year over year. Huntsman had $409 million of cash at the end of the quarter, down 21% year over year. Long-term debt was $2,311 million, down 43% year over year.

The company repurchased around 4.6 million shares worth roughly $138 million during the quarter.

Outlook

Huntsman stated that growth in its Polyurethanes business continues on the back of good supply and demand fundamentals. The company remains committed to execute opportunities in its downstream businesses while creating shareholder value.

The company also expects to spend around $325 million on capital expenditures this year. It also expects adjusted effective tax rate for 2018 to be roughly 20-22%.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 5.09% due to these changes.

VGM Scores

Currently, Huntsman has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. It comes with little surprise Huntsman has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.




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