Huntsman Corporation (HUN – Free Report) has been performing well of late. The company has a market capitalization of about $7.4 billion. The stock has yielded a solid year-to-date return of around 61.3%. The stock has an expected long-term earnings growth rate of 8%. With strong fundamentals and solid growth opportunities, this stock can be a solid bet now.
Strong Q3 Performance
Huntsman recorded a net income of $179 million or 60 cents per share in third-quarter 2017, up from $64 million or 23 cents it earned a year ago. Barring one-time items, adjusted earnings per share were 67 cents for the quarter, which topped the Zacks Consensus Estimate of 50 cents.
Revenues for the quarter increased 18.5% year over year to $2,169 million, which also surpassed the Zacks Consensus Estimate of $2,060 million.
Huntsman, during third-quarter earnings call, said that despite the termination of its merger of equals deal with Clariant, the company’s business continues to improve across the board. It expects its balance sheet to strengthen owing to the proceeds from the secondary offering of Venator. The company remains focused on expanding its margins, generating strong free cash flow and growing its downstream differentiated and specialty businesses.
Till date, Huntsman has generated free cash flow of more than $1 billion and has also reduced net debt by more than $2 billion since 2016.
Positive Earnings Surprise History
Huntsman has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 32.7%.
Estimates Moving Up
The company’s estimates for the current quarter and the full year, have moved north in the past 30 days, reflecting a positive outlook of analysts on the stock. In fact, over the past month, current quarter estimates have risen from 42 cents per share to 52 cents, while current year estimates have risen from $2.40 per share to $2.61.
Solid Zacks Rank & Score
Huntsman currently carries a Zacks Rank #2 (Buy) and also has a VGM Score of A. Here V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three scores. Such a score allow investors to eliminate the negative aspects of stocks and select winners.
Shares of Huntsman have moved up 61.6% over the past year, outperforming the industry’s 28% growth.
We believe that Huntsman’s effort to generate free cash flows, reduce debt and invest in differentiated and specialty business bodes well and should drive the stock higher.
Other Stocks to Consider
Some other top-ranked stocks in the basic materials space are Koppers Holdings Inc. (KOP – Free Report) , Daqo New Energy Corp. (DQ – Free Report) and Kronos Worldwide Inc. (KRO – Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Koppers has an expected long-term earnings growth rate of 18%. Its shares have moved up 20.4% year to date.
Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have surged a whopping 166.1% year to date.
Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have rallied 142.7% year to date.
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