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Huntsman (HUN) Up 19% in 6 Months: What's Behind the Rally?

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Shares of Huntsman CorporationHUN have popped around 19% over the last six months. The company has also outperformed its industry 's gain of roughly 9% over the same time frame.

Huntsman has a market cap of roughly $7.7 billion and average volume of shares traded in the last three months is around 2,920.8K. The company has expected long-term earnings per share growth of 8.3%.

Let's take a look into the factors that are driving this Zacks Rank #2 (Buy) stock.

Driving Factors

Strong fourth-quarter results, efforts to expand specialty businesses and focus on free cash flow generation have contributed to the rally in Huntsman's shares. The company topped earnings and revenues estimates in the fourth quarter, driven by its sustained investments in operational reliability and organic growth.

Huntsman's profits climbed roughly 92% year over year to $246 million or $1.00 per share in the fourth quarter. Adjusted earnings of 76 cents per share for the quarter outstripped the Zacks Consensus Estimate of 66 cents.

Revenues jumped around 16% year over year to $2,203 million and also beat the Zacks Consensus Estimate of $2,097 million.

Huntsman, in its fourth-quarter call, noted that it will continue investing in organic growth. The company expects to generate $450-$650 million of free cash flow in the next few years and will also pursue acquisitions that create value, stronger earnings and growth in its downstream business.

Huntsman remains focused on expanding its margins, generating strong free cash flow and growing its downstream specialty and formulation businesses.

Huntsman generated free cash flow of $190 million in the fourth quarter, up around 43% from $133 million a year ago. During 2017, the company repaid debt worth roughly $2.1 billion. Moreover, it had total cash and unused borrowing capacity worth $1,247 million at the end of 2017.

Huntsman also recently announced a 30% increase in its quarterly dividend from 12.5 cents to 16.25 cents per share. The company's board also authorized it to repurchase shares worth up to $400 million in addition to the $50 million remaining under its share repurchase authorization obtained in September 2015.

Huntsman Corporation Price and Consensus

Huntsman Corporation Price and Consensus | Huntsman Corporation Quote

Other Stocks to Consider

Other top-ranked companies in the basic materials space include Olympic Steel, Inc. ZEUS , Steel Dynamics, Inc. STLD and LyondellBasell Industries N.V. LYB , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Olympic Steel has an expected long-term earnings growth rate of 7.5%. Its shares have gained 16% over the past six months.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have rallied roughly 38% over the past six months.

LyondellBasell has an expected long-term earnings growth rate of 9%. Its shares have rallied around 20% over the past six months.

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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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