Huntsman Chemicals Corp - Value
May 10 2011 - 8:00PM
Zacks
Huntsman Chemicals Corp (HUN) is a value stock with a twist
of momentum, recently jumping to a multi-year high after reporting
an impressive 96% earnings surprise. HUN also trades at a discount
to its peers, making this Zacks #1 rank stock a compelling value
play.
Company Description
Huntsman Corp manufactures and sells a line of
organic and inorganic chemical products worldwide. The company was
founded in 1970 and has a market cap of $4.95 billion.
Although Huntsman has trending higher for the last
few months, shares got an extra boost on May after the company
reported strong Q1 results that came in ahead of expectations.
First-Quarter Results
Revenue for the period was up 28% from last year to
$2.7 billion. Earnings looked even better, coming in at 47 cents,
96% ahead of the Zacks Consensus Estimate, where the company has an
average earnings surprise of 107% over the last four quarters.
The good quarter was helped by the company's
ability to pass along higher input costs to its customers, with
demand remaining strong in spite of higher prices. But in spite of
that dynamic, Huntsman saw margin growth in 3 of its 5 operating
units. The company also noted that its factories are running at a
high utilization rate and that it sees continued strength in
demand.
Financial Profile
One of the few knocks against Huntsman has been its
balance sheet, which has provided it with plenty of operating
leverage in the strong market. But regardless, its financial
position has been on the upswing, with total debt down $119 million
from last year to $4.06 billion against cash and short-term
investments of $639 million.
Estimates
We saw some pretty sharp movement in estimates off
the good quarter, with the current year adding 24 cents to $1.66
while the next-year estimate gained 20 cents to $2.01, a bullish
21% growth projection.
Valuation
But in spite of the gains, HUN still has plenty of
value, trading with a forward P/E of 12.5%, a nice discount to its
peer average of 14.6X. Its PEG Ratio (PE/Growth) of .625 is well
below the traditional benchmark of 1 for value.
12-Month Chart
On the chart, shares jumped into a new multi-year
high on the good quarter, take a look below.
Michael Vodicka is the Momentum Stock Strategist
for Zacks.com. He is also the Editor in charge of the Zacks
Momentum Trader Service.
HUNTSMAN CORP (HUN): Free Stock Analysis Report
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