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Huntsman (HUN) Down 8.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Huntsman (HUN - Free Report) . Shares have lost about 8.4% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Huntsman’s Q3 Earnings Match, Revenues Top Estimates

Huntsman recorded net loss of $8 million or 5 cents per share in third-quarter 2018 against net income of $179 million or 60 cents recorded a year ago.

Barring one-time items, adjusted earnings were 84 cents per share in the quarter, in line with the Zacks Consensus Estimate.

Revenues totaled $2,444 million, up around 13% year over year on higher sales across all segments. The figure beat the Zacks Consensus Estimate of $2,239 million.

Segment Highlights

Polyurethanes: Revenues at the segment rose around 13% year over year to $1,355 million on higher average selling price and sales volumes.

Performance Products: Revenues at the unit went up 20% to $599 million on an uptick in average selling prices and volumes.

Advanced Materials: Revenues at the unit increased around 6% to $279 million backed by higher average selling prices and volumes.

Textile Effects: Revenues at the division rose roughly 6% to $204 million buoyed by higher average selling prices that more than offset lower volumes.

Financials

Huntsman generated free cash flow of $226 million during the quarter, down slightly year over year. The company had $446 million of cash at the end of the quarter, down 1.1% year over year. Long-term debt was $2,277 million, down 20% year over year.

The company repurchased around 5.9 million shares worth roughly $175 million during the quarter.

Outlook

Huntsman noted that it continues to strengthen its balance sheet with net leverage improving to 1.3 times. The company is committed to a balanced approach to capital allocation by growing its downstream businesses portfolio while creating shareholder value.

The company also expects around $300-$320 million of capital expenditures this year. It expects adjusted effective tax rate for 2018 at around 19-21%.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -12.05% due to these changes.

VGM Scores

At this time, Huntsman has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Huntsman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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