) reported its
second quarter earnings
on Tuesday, posting a 12% decline, primarily attributable to its
faltering Performance Chemicals segment. The unit, which
manufactures products such as titanium dioxide and Teflon coating,
generated $7.2 billion in 2012 but hasn't fared so well this year.
While titanium dioxide volume increased by 12% from second quarter
2012, and by 18% from the previous quarter this year, the unit was
still negatively impacted by lower prices. Additionally, price
declines for fluropolymers and refrigerants contributed to a 55.6%
decline in the company's operating earnings.
Overall, DuPont's Performance Chemicals sales dropped by 9% this
quarter. The company's second quarter net income totaled $1.03
billion, or $1.11 per share, versus $1.17 billion, or $1.23 per
share, during the same period last year. Following the earnings
report, the chemical giant
its plans to explore a spin-off, sale, or other options for the
businesses within the Performance Chemicals unit. CEO Ellen Kullman
stated that the company is "carefully weighing the strong cash
generation of our Performance Chemicals businesses against their
cyclicality and lower growth profile."
DuPont's struggles within its Performance Chemicals segment
inspired us to take a closer look at the chemicals industry. We
wanted to see if the company's peers had encountered similar
obstacles within their Performance Chemicals segments and, if so,
how successful they were in overcoming those challenges.
To begin, we constructed a universe comprised of stocks belonging
to the chemicals - major diversified industry. We then screened for
stocks that are
rallying above their 20-day, 50-day, and 200-day moving averages,
which indicates that these stocks have strong upward momentum.
Next, we decided to incorporate a metric that analyzes past
performance, in order to give some context for the stocks' upward
momentum. By screening for stocks that have outperformed over the
last quarter, with over 15% return, we've isolated the firms that
have done well in the past and are likely to continue to do well.
We were left with three chemical stocks on our list.
Quarterly sales data sourced from Zacks Investment
Do you think these companies will continue to outperform despite
the challenges facing the performance chemicals market? Use this
list as a starting point for your own analysis.
1. Aceto Corp.
): Engages in sourcing, quality assurance, regulatory support,
marketing, and distributing chemically derived pharmaceuticals,
biopharmaceuticals, specialty chemicals, and crop protection
Market cap at $423.7 million, most recent closing price at $15.09.
Performance over the last quarter at 48.15%.
The stock is currently rallying 4.97% above its 20-day moving
average, 14.39% above its 50-day MA, and 39.17% above it 200-day
The company released its third quarter fiscal year 2013 earnings on
May 10. Aceto reported a record $150.9 million in revenue, which
reflects a 24.3% year-over-year increase from the same period in
The Motley Fool
, Aceto's revenue beat the analysts' estimate of $136.8 million,
and its EPS of $0.34 exceed the estimated $0.26 per share.
While sales in Aceto's Performance Chemicals division were
unchanged from third quarter fiscal year 2012, margins shrank to
13.4% from last year's 15.5%. As a result, the division had $7.1
million in gross profit in the most recent quarter versus $8.2
million last year.
CEO Salvatore J. Guccione
stated that the decline was "due primarily to product mix within
2. FutureFuel Corp.
): Engages in the manufacture and sale of specialty chemicals and
bio-based products primarily in the United States.
Market cap at $677.4 million, most recent closing price at $15.74.
Performance over the last quarter at 27.26%.
The stock is currently rallying 7.45% above its 20-day MA, 9.35%
above its 50-day MA, and 25.62% above it 200-day MA.
On May 7, FutureFuel reported its first quarter 2013 earnings, and
Wall St. Cheat Sheet
, the company beat the average analysts' estimates in both revenue
and EPS. The company generated $92.2 million in revenue during the
quarter, which is a 7.55% gain from the same period last year and
exceeds the estimate of $82.25 million. FutureFuel's adjusted EPS
was $0.33, topping the $0.19 estimate and reflecting a 94.12% leap
from $0.17 EPS in the first quarter of 2012.
The company generated $40.5 million in chemical revenues, up 4%
from $38.4 million during the first quarter of 2012. In the
earnings conference call
, Principal Financial Officer Rose Sparks noted that sales volumes
for diisopropylbenzene chemical intermediates decreased by 14%, and
the company saw an 11% drop in other performance chemicals "due to
a shift in the orders of campaign products."
3. Air Products & Chemicals Inc.
): Provides atmospheric gases, process and specialty gases,
performance materials, equipment, and services worldwide.
Market cap at $20.98 billion, most recent closing price at $100.50.
Performance over the last quarter at 19.04%.
The stock is currently rallying 5.39% above its 20-day MA, 6.20%
above its 50-day MA, and 15.91% above it 200-day MA.
The company released its fiscal third quarter 2013 earnings on July
23, surpassing expectations in revenue and EPS. Air Products
generated $2.55 billion in revenue during the quarter, which is 9%
higher than the revenue reported in the same period last year. The
company's $2.55 billion in revenue is also higher than the average
analysts' estimate, which, according to
The Motley Fool
, was $2.53 billion. Its EPS came in at $1.36, which met
Air Products' Electronics and Performance Materials division
reported $566 million in sales, reflecting a 6% year-over-year
decline. The company attributed most of the loss to "lower
Electronics process materials volumes and equipment sales." On the
other hand, sales increased by 3% sequentially from $549 million in
the previous quarter.
This story by Mary-Lynn Cesar originally appeared on
All data sourced from Finviz, unless otherwise noted.
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