Koppers Holdings Lowered to Strong Sell - Analyst Blog

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Zacks Investment Research downgraded Koppers Holdings Inc. ( KOP ) to a Zacks Rank #5 (Strong Sell) on Jun 17, 2014. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.

Why the Downgrade?

The company reported lackluster first-quarter 2014 results on May 5. Since then, market sentiments have been weak for Koppers Holdings, with the share price down by 12.8%. Adjusted earnings came in at 32 cents per share, falling short of the Zacks Consensus Estimate of 53 cents by 39.6%. Also, the bottom-line result decreased 40.7% year over year.

Revenues generated were $331.4 million, down 10.5% year over year due to decline of 12.1% and 7.9% in the Carbon Materials and Chemicals division and Railroad and Utility Products and Services division sales respectively. Adjusted operating profit declined 30% to $17.7 million, with margin at 5.3% versus 6.8% in the year-ago quarter.   

Disappointing results led to downward revision in earnings estimates for Koppers Holdings. Over the last 30 days, the Zacks Consensus Estimate has decreased 5.3% to $2.51 for 2014 and by 0.6% to $3.36 for 2015. These unfavorable revisions as well as an average negative earnings surprise of 12.2% have made us skeptical about Koppers Holdings' performance in the quarters ahead. Currently, the company has Earnings ESP of -12.4% and -6.3% for 2014 and 2015 respectively.   

Other Stocks to Consider

Koppers Holdings has a $754.9 million market capitalization. Some better-ranked stocks in the chemical-diversified industry include Compass Minerals International Inc. ( CMP ), Koninklijke DSM N.V. ( RDSMY ) and KMG Chemicals Inc. ( KMG ). While Compass Minerals International sports a Zacks Rank #1 (Strong Buy), both Koninklijke DSM and KMG Chemicals hold a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: KOP , KMG , CMP , RDSMY

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