Why Chemours Plunged Today
Key Points
Chemours met revenue expectations but missed profit expectations in the fourth quarter.
The stock had roughly doubled since late November, so a pullback on anything less than perfect is no surprise.
However, the high-growth Opteon refrigerants segment is a bright spot, and could lead a recovery.
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Shares of European chemicals company Chemours (NYSE: CC) fell 16.8% on Friday, as of 2:46 p.m. EDT.
The chemicals giant reported lackluster earnings today and also provided guidance that merely met the analyst consensus. Thus, it's no surprise the stock found itself in the red after having doubled since late November. Still, opportunity may lurk one of Chemours' all-star up-and-coming products.
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Chemours delivers mixed results
In the fourth quarter, Chemours delivered a 2.2% revenue decline, which was in line with Wall Street's expectations, while adjusted (non-GAAP) earnings per share fell 46% to $0.05, missing expectations by $0.02.
For the year ahead, Chemours forecasts 3% to 5% revenue growth, which would result in $5.98 billion to $6.10 billion in 2026 revenue, with the midpoint basically in line with consensus estimates. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is projected between $800 million and $900 million, which would mark a solid 14.6% increase at the midpoint over 2025's $742 million EBITDA figure.
2025 EBITDA was negatively affected by a one-time inventory charge in the company's Advanced Performance Materials segment, which is experiencing "short-term cyclical end market headwinds," according to the company.
Image source: Getty Images.
Watch the high-growth refrigerants segment
While Chemours seems like a relatively low-growth cyclical, and therefore an unexciting investment, its largest segment did show some growth last year: its Opteon low-carbon refrigerants.
These new patented refrigerants have been shipping to HVAC equipment manufacturers over the last few years, and growth is ramping quickly as older refrigerants are being phased out by regulations over the next 10 years. Last year, Opteon grew 56%, boosting the entire Thermal Solutions segment by 13% and that segment's EBITDA by 18%. Opteon sales accounted for 22% of Chemours' total sales last year, so if the other cyclical segments recover and Opteon becomes a larger part of Chemours' business, there could be better times ahead. Value investors may therefore want to investigate this industrial stock on the pullback.
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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
