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Bear of the Day: Huntsman (HUN)

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Huntsman Corporation ( HUN ) is feeling the stress of a tough specialty chemicals market. This Zacks Rank #5 (Strong Sell) continues to lower full year guidance as conditions deteriorate.

Huntsman makes specialty chemicals including performance additives and titanium dioxide. It operates more than 100 manufacturing facilities in 30 countries around the world.

Another Cut to Full Year Guidance

In a meeting with analysts on Dec 1, Huntsman cut its fourth quarter guidance again as conditions continue to deteriorate in the Ti02 market. Pricing is still falling due to over supply.

Additionally, Huntsman is also seeing weaker ethylene trends, including lower margins.

Despite cutting costs pretty aggressively, it's still a tough environment for the company.

2015 and 2016 Estimates Falling

Not surprisingly, given the conditions, analysts have been cutting estimates for both this year and next. 4 estimates have been cut for 2015 in the last month. 3 were cut for 2016 during that same time, but 1 estimate did move higher.

Earnings are expected to fall 12.5% in 2015.

Analysts do expect a rebound of 21% in 2016 but investors should be cautious because market conditions aren't yet improving so that could change over the next few weeks.

Shares Near New Lows

The stock has taken a beating over the second half of the year and is now trading near new lows.

The dividend is currently yielding a juicy 4.8% and, for now, the analysts believe it is safe.

Shares are also cheap, with a forward P/E of just 5.9.

But until market conditions improve, investors could see further bleeding in the shares.

If you must own a chemical company right now, you might want to consider Celanese ( CE ). It's a Zacks Rank #1 (Strong Buy) and is expected to actually grow earnings this year.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.

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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 Nasdaq, Inc.


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

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