Why Is Huntsman (HUN) Down 2.3% Since Last Earnings Report?

A month has gone by since the last earnings report for Huntsman (HUN). Shares have lost about 2.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Huntsman due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Huntsman's Q4 Earnings Miss Estimates, Revenues Beat

Huntsman logged a fourth-quarter 2023 net loss of $71 million or 41 cents per share compared with a loss of $91 million or 48 cents per share in the year-ago quarter.

Barring one-time items, adjusted loss per share came in at 21 cents per share for the reported quarter. It was wider than the Zacks Consensus Estimate of a loss of 14 cents.

Revenues were $1,403 million, down around 15% year over year. The top line, however, beat the Zacks Consensus Estimate of $1,324 million. Huntsman witnessed lower sales across its segments in the quarter due to reduced prices and volumes.

Segment Highlights

Polyurethanes: Revenues from the segment declined 16% year on year to $895 million in the reported quarter, owing to lower MDI average selling prices, fewer sales volumes and an adverse sales mix. It was above our estimate of $881 million. MDI average selling prices fell in the quarter due to less favorable supply and demand dynamics.

Performance Products: Revenues fell 15% to $260 million as a result of a decline in average selling prices and modestly lower sales volumes. It was above our estimate of $246 million. Sales volumes fell due to slow construction activities and soft demand in fuel and lube and other industrial markets.

Advanced Materials: Revenues from the unit declined 10% to $251 million due to reduced sales volumes and lower average selling prices. It was higher than our estimate of $243 million. Sales volumes fell mainly due to lower customer demand in industrial and commodity markets.

FY23 Results

Earnings for full-year 2023 were 57 cents per share compared with earnings of $2.27 per share a year ago. Net sales fell around 24% year over year to $6,111 million.

Financials

Huntsman ended 2023 with cash of $540 million, down around 17% year over year. Long-term debt was $1,676 million, flat year over year.

Net cash provided by operating activities from continuing operations was $166 million in the fourth quarter, while free cash flow from continuing operations was $83 million.

Huntsman repurchased approximately 2.1 million shares for roughly $50 million in the fourth quarter. Its board approved a 5% increase to its quarterly dividend.

Outlook

Huntsman said that it witnessed a modest improvement in demand in early 2024 from the lows experienced in the fourth quarter. Although the company has yet to see a clear inflection point in demand, it remains optimistic about the future. The company is well-placed to gain significantly from volume leverage once its end markets improve and as it continues to control costs, Huntsman noted.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -154.34% due to these changes.

VGM Scores

Currently, Huntsman has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Huntsman has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Huntsman is part of the Zacks Chemical - Diversified industry. Over the past month, Albemarle (ALB), a stock from the same industry, has gained 5.7%. The company reported its results for the quarter ended December 2023 more than a month ago.

Albemarle reported revenues of $2.36 billion in the last reported quarter, representing a year-over-year change of -10.1%. EPS of $1.85 for the same period compares with $8.62 a year ago.

Albemarle is expected to post earnings of $0.56 per share for the current quarter, representing a year-over-year change of -94.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -16.3%.

Albemarle has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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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.

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