Chemical company, Huntsman Corporation (NYSE:HUN) has been performing well of late. The company has a market capitalization of about $5.8 billion. The stock has yielded a solid one-year return of around 58.1%.
With strong fundamentals and solid long-term growth opportunities, HUN stock can be a solid bet now.
Huntsman’s Strong Q1 Performance & Upbeat Guidance
Huntsman recorded a net income of $76 million or 31 cents per share in first-quarter 2017, up from $56 million or 24 cents per share it earned a year ago. Barring one-time items, adjusted earnings per share were 57 cents for the reported quarter, which beat the Zacks Consensus Estimate of 38 cents.
Revenues for the quarter increased 4.8% year over year to $2,469 million, surpassing the Zacks Consensus Estimate of $2,448 million.
The company witnessed positive business development during the first quarter and the performance of almost all the business segments exceeded quarterly expectations. Huntsman is committed to separating the Pigments and Additives business (known as Venator) and it is planning a spinoff or IPO (initial public offering) this upcoming summer.
Based on the strong first quarter performance and an improved outlook for the remaining year, the company expects to generate free cash flows of over $450 million in 2017.
Huntsman Boasts a 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 20.12%.
HUN’s Estimates Continue to Move Up
The company’s estimates for current fiscal 2017 and fiscal 2018, have moved north in the past 60 days, reflecting a positive outlook of analysts on the stock. For the current fiscal, estimates have improved 17.8% to $2.18 per share in the past 60 days. For fiscal 2018, the Zacks Consensus Estimate has moved up around 16% to $2.47.
Solid Zacks Rank & Score for Huntsman
Huntsman currently sports a Zacks Rank #1 (Strong 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.
HUN’s Stock Price Performance
Shares of Huntsman have increased around 5% over the past three months, outperforming the Zacks categorized Chemicals-Diversified industry’s loss of 1.2%.
We believe that Huntsman’s effort to reduce debt, spinoff of the Pigments and Additives division and improving outlook for the remaining year bodes well and should drive the stock higher. The expected long-term earnings growth rate is currently pegged at 7%.
Here are three other stocks in the basic materials space to consider…
All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Kronos has an expected long-term earnings growth of 5%.
ArcelorMittal has an expected long-term earnings growth of 11.4%.
Chemours Company has an expected long-term earnings growth of 15.5%.
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