Ashland Global Holdings Inc. 's ASH stock looks promising at the moment. We are positive on the company's prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let's delve deeper into the factors that make this Zacks Rank #1 (Strong Buy) stock an attractive investment option.
What's Working in Favor of ASH?
An Outperformer: Ashland has outperformed the industry over a year. The company's shares have gained around 14.3% over this period, compared with roughly 2.3% decline recorded by the industry.
Estimates Moving Up: Earnings estimates for Ashland have moved north over the past three months, reflecting analysts' confidence on the stock. Over this period, the Zacks Consensus Estimate for fiscal 2019 has increased by around 4.8% to $4.14 per share. The Zacks Consensus Estimate for first-quarter fiscal 2019 has also moved up 17.6% over the same timeframe to 60 cents.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for fiscal 2019 reflects an expected year-over-year growth of 15.6%. Moreover, earnings are expected to register a 30.4% growth in the fiscal first quarter. The company also has an expected long-term earnings per share growth of 10%.
Upbeat Prospects: Ashland swung to a profit of $9 million or 15 cents per share in the fourth quarter of fiscal 2018 (ended Sep 30, 2018) from a loss of $58 million or 92 cents a year ago. Revenues for the quarter also went up roughly 9% year over year to $956 million on the back of higher sales across all segments.
Sales for fiscal 2018 increased 14.8% year over year to $3,743 million. Profit for the fiscal also rose to $114 million or $1.79 per share from $1 million or a penny per share a year ago.
Ashland, in its fourth-quarter call, said that it expects adjusted earnings per share in the range of $4.20-$4.40 for fiscal 2019. It also expects adjusted earnings for first-quarter fiscal 2019 in the range of 55-65 cents per share, reflecting an increase from 42 cents in the year-ago quarter.
Ashland is gaining from strong operational performance and appropriate pricing actions in response to raw material cost inflation. The company is also benefiting from actions to grow its premium mix, its focus on improving asset utilization and cost management. All these contributed to a strong growth in its adjusted EBITDA margins in fiscal 2018.
The company, earlier this year, announced a program to eliminate $120 million of existing corporate and Specialty Ingredients unit's selling, general and administrative (SG&A) costs as well as manufacturing facility-related expenses. The company has already captured $20 million in run-rate saving at the end of September 2018 and expects to achieve the $120 million of total run rate savings by the end of calendar year 2019. Ashland also expects to generate roughly $230 million in free cash flow in fiscal 2019.
Ashland also recently agreed to divest its Composites unit and the butanediol ("BDO") manufacturing facility in Marl, Germany, to London-based INEOS Enterprises in a deal worth around $1.1 billion. The transaction is expected to close before the end of the June 2019 quarter. The move will allow the company to focus on its portfolio of Specialty Ingredients.
Ashland noted that the sale of these businesses is in sync with its goal of having a more streamlined and focused product portfolio that will reduce earnings volatility and improve margins. The company said that it will be better placed to deliver sustained earnings growth and create significant value for its shareholders.
Ashland anticipates net proceeds of around $1 billion from the divestitures and expects to use that proceeds primarily for debt reduction. Before reporting its first-quarter fiscal 2019 results, the company plans to update its outlook for both the first quarter and fiscal 2019 to reflect the impact of moving these businesses to discontinued operations.
Ashland Global Holdings Inc. Price and Consensus
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company MOS , CF Industries Holdings, Inc. CF and Methanex Corporation MEOH , each sporting a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
Mosaic has expected long-term earnings growth rate of 7%. Its shares have surged 52% in the past year.
CF Industries has expected long-term earnings growth rate of 6%. Its shares have rallied 27% in a year.
Methanex has expected long-term earnings growth rate of 15%. Its shares have gained 15% in the past year.
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