It has been about a month since the last earnings report for Ashland (ASH). Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ashland due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Ashland's Earnings Beat Estimates in Q4, Revenues Lag
Ashland recorded profits from continuing operations of $60 million or $1.09 per share in the fourth quarter of fiscal 2022 (ending Sep 30, 2022), up from $33 million or 55 cents in the prior-year quarter.
Barring one-time items, adjusted earnings came in at $1.46 per share, up from the year-ago quarter’s figure of $1.22. It topped the Zacks Consensus Estimate of $1.39.
Sales rose around 7% year over year to $631 million. It missed the Zacks Consensus Estimate of $636.1 million. The top line was driven mainly by disciplined pricing actions leading to a recovery in costs in a high-inflation environment as well as better product mix, partly offset by unfavorable currency swings. The company witnessed sales growth across its segments in the quarter.
Life Sciences: Sales in the segment were up 13% year over year to $213 million in the reported quarter, aided by double-digit growth to pharmaceutical customers reflecting better product mix, cost recovery and strong demand.
Personal Care: Sales in the division rose 3% year over year to $188 million. Sales were supported by strong demand, disciplined pricing and better mix, partly offset by unfavorable currency translation.
Specialty Additives: Sales in the segment increased 3% year over year to $187 million, aided by inflation recovery, mix improvements and strong demand.
Intermediates: Sales in the segment went up 7% year over year to $64 million, led by higher merchant-market prices and improved mix.
Fiscal 2022 Results
Profit from continuing operations (as reported) or full-year fiscal 2022 was $3.20 per share, compared with $2.82 per share a year ago. Revenues were $2.4 billion for the fiscal, up around 13% year over year.
Cash and cash equivalents were $646 million at the end of the quarter, up around 208% year over year. Long-term debt was $1,270 million, down around 20% year over year.
Cash flows from operating activities was $179 million in the reported quarter, up around 19% year over year.
Ashland expects sales in the range of $2.5-$2.7 billion for fiscal 2023. It also anticipates adjusted EBITDA between $600 million and $650 million for the fiscal.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
Currently, Ashland has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ashland has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Ashland belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Celanese (CE), has gained 11.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Celanese reported revenues of $2.3 billion in the last reported quarter, representing a year-over-year change of +1.5%. EPS of $3.94 for the same period compares with $4.82 a year ago.
Celanese is expected to post earnings of $1.75 per share for the current quarter, representing a year-over-year change of -64.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.
Celanese has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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