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Huntsman's (HUN) Shares Rally 36% in 3 Months: Here's Why

Zacks Equity Research
·4-min read

Huntsman Corporation’s HUN shares have shot up 35.7% over the past three months, outperforming the industry’s rise of 9%. The company has also topped the S&P 500’s roughly 6.7% rise over the same period.

Let’s dive into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

What’s Driving HUN?

Forecast-topping earnings performance in the third quarter of 2021 and upbeat prospects have contributed to the run-up in the company's shares. Huntsman’s adjusted earnings per share of $1.08 for the third quarter topped the Zacks Consensus Estimate of 91 cents. Revenues climbed around 51% year over year to $2,285 million, surpassing the Zacks Consensus Estimate of $2,019.2 million.

The company saw higher sales across all segments in the quarter and reaped the benefits of economic recovery, higher average selling prices, synergies arising from its recent acquisitions, and certain cost-saving initiatives.

Huntsman, in its third-quarter call, said that it is seeing strong pent-up demand across its businesses amid supply chain disruptions. The company is witnessing positive trends in its construction markets. It is investing in high-return organic projects that will boost its total returns and improve margins over the next 24 to 36 months.

Huntsman remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.

The company's Polyurethanes segment is well positioned for strong upside in the long term on the back of its focus on ramping up its high-value differentiated downstream portfolio. Substitution of MDI for less effective materials will remain a key driving factor for the MDI business.

Huntsman should also gain from significant synergies of acquisitions. Its strong liquidity and balance sheet leverage gives it adequate flexibility to continue to develop and expand its core businesses through acquisitions and internal investments.

The company expects to deliver around $135 million of annualized savings and acquisition integration synergies by mid-2023. It also remains on track with the integration of CVC Thermoset and Gabriel Performance Products acquisitions. Huntsman expects these acquisitions to deliver run-rate synergies of roughly $23 million by early 2023.

Huntsman Corporation Price and Consensus

Huntsman Corporation Price and Consensus
Huntsman Corporation Price and Consensus

Huntsman Corporation price-consensus-chart | Huntsman Corporation Quote

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Nutrien Ltd. NTR, AdvanSix Inc. ASIX and Dow Inc. DOW, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 12.9% upward over the last 60 days.

Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 52% in a year.

AdvanSix has a projected earnings growth rate of 196.9% for the current year. ASIX's consensus estimate for the current year has been revised 14.1% upward over the last 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 184% in a year.

Dow has a projected earnings growth rate of 447% for the current year. The consensus estimate for DOW’s current year has been revised 7.2% upward over the last 60 days.

Dow beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 14.1%. DOW shares have gained around 6% in a year.


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Huntsman Corporation (HUN) : Free Stock Analysis Report

AdvanSix (ASIX) : Free Stock Analysis Report

Nutrien Ltd. (NTR) : Free Stock Analysis Report

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Zacks Investment Research