Specialty chemical company
) has delivered six straight positive earnings surprises, including
a 17.3% surprise in the second-quarter 2012. With relatively low
valuation multiples, including a price-to-sales (P/S) ratio as low
as 0.5, this Zacks #2 Rank (Buy) stock is worth considering as a
Chemtura Tops in Second Quarter
Chemtura's second quarter adjusted earnings of 61 cents per share
outperformed the Zacks Consensus Estimate of 52 cents. The results,
announced on August 1, were driven by growth across the
AgroSolutions and Consumer Products divisions. Shares shot up as
much as 15% following the earnings release, making it one of the
biggest gainers in the basic materials sector.
Revenues, however, fell 4% year over year to $845 million. Declines
across the Industrial Performance Products and Industrial
Engineered Products segments were, in part, offset by higher
revenues from AgroSolutions and Consumer Products units.
Chemtura said that it expects to deliver year over year growth in
the remainder of 2012, aided by an improvement in its distribution
channels, continued innovation and a recovery in its Consumer
Products segment. The company also doubled its share repurchase
authorization to $100 million.
Rising Earnings Estimates
One out of 3 estimates has been revised higher in the last 30 days
for 2012, pushing the Zacks Consensus Estimate up 4 cents (or 2.6%)
to $1.55 per share. This reflects a projected annualized growth of
One estimate out of 3 moved higher for 2013 over the same time
frame, boosting the Zacks Consensus Estimate by a couple of cents
(or 1%) to $1.99 per share. This represents an estimated year over
year growth of 28.4%.
Plenty of Value
Chemtura's shares have recovered following a steep drop in the
second half of 2011. The stock has performed reasonably well so far
this year, generating a healthy year-to-date return of roughly 29%.
With its shares still trading below its 52-week high of $17.91
(reached on May 3, 2012), there is room for upside.
In addition to having a low P/S, the stock has a forward P/E ratio
of just 9.8. It also has a low price-to-book (P/B) ratio of 1.4. (A
P/S ratio lower than 1.0, a P/E below 15.0 and a P/B ratio under
3.0 generally indicate value). Moreover, the company has a PEG
ratio of 0.43, a 57% discount to the benchmark of 1 for a fairly
Founded in 1900, Chemtura Corporation makes and distributes
specialty chemical solutions and consumer products globally with
annual sales of $3 billion. Its broad range of offerings includes
recreational water purification products, petroleum additives, seed
treatments, pesticides, bromine and bromine-based products and hot
cast elastomers. The company, which has a market cap of roughly
$1.5 billion, serves a host of industries including agriculture,
automotive, building and construction, electronics, packaging,
plastics and transportation.
CHEMTURA CORP (CHMT): Free Stock Analysis
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