LSB Industries Inc.
) has delivered earnings surprises in three of the last four
quarters with an average beat of 7.7%. Most recently, this
manufacturer of climate control and chemical products outperformed
the Zacks Consensus Estimate by 26.1% in its second quarter. In
addition, the Zacks #1 Rank (Strong Buy) stock trades at a P/E
multiple of just 13.9, which makes it an attractive pick for value
Solid Second Quarter
On August 8, LSB Industries reported second quarter adjusted
earnings of $1.11 per share, which trumped the Zacks Consensus
Estimate of 88 cents. Revenues declined 11.2% year over year to
$209.3 million, but exceeded the Zacks Consensus Estimate of $189
million. The year-over-year decrease was due to lower sales in both
its Chemical Business and Climate Control Business segments.
Chemical Business sales were negatively impacted due to an
explosion at the company's El Dorado chemical plant and unplanned
downtime at its Pryor chemical plant. Lower revenues from the
Climate Control Business were due to a decline in sales of
geothermal and water source heat pumps, hydronic fan coil sales,
and other heating, ventilation and air conditioning sales.
Despite lower sales, the company is making progress and is now
geared up to make its El Dorado plant operational in the coming
quarters. Moreover, the company has completed the repairs to the
urea reactor at the Pryor Facility. The company also has strong
agriculture fundamentals, making the stock attractive.
Rising Earnings Momentum
The Zacks Consensus Estimate for fiscal 2012 has moved up 6.4% to
$3.14 per share over the last 60 days. For fiscal 2013, the Zacks
Consensus Estimate has increased 4.8% to $4.60 per share,
representing a year-over-year increase of 46.3%.
Plenty of Value
Shares of LSB Industries have performed reasonably well so far this
year, generating a healthy year-to-date return of roughly 47.4%.
In addition to a low P/E multiple, the stock has an attractive P/B
ratio of 2.9 (a P/E ratio below 15.0 and a P/B multiple lower than
3.0 generally indicate value).
Chart Showing Consistent Rise
Shares of LSB Industries have been rising since mid June 2012, and
reached a 52-week high of $44.29 on September 27, 2012. Moreover,
the stock is currently trading above its 50- and 200-day moving
averages, which stand at $38.31 and $34.58, respectively.
Volume is fairly strong, averaging roughly 167K daily. The
year-to-date return for the stock is 55.22% compared with the
S&P 500's return of 15.38%.
LSB Industries is a manufacturing and marketing company with
principal business activities that consist of the manufacture and
sale of commercial and residential climate control products, such
as geothermal and water source heat pumps, hydronic fan coils,
modular chillers and large custom air handlers. The company is also
engaged in the manufacture and sale of chemical products for the
agriculture, mining and industrial markets. LSB Industries has a
market cap of roughly $978 million.
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