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Ashland (ASH) Issues Updates on Outlook for Q3 and Fiscal 2021

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Ashland Global Holdings Inc. ASH recently announced an update for preliminary third-quarter fiscal 2021 and full-year financial results.

Economic recovery in the United States and other regions of the world is leading to strong demand for most products in the company’s Life Sciences, Personal Care and Household as well as Specialty Additives end markets, Ashland noted.

However, restricted availability of some raw materials as well as shipping, logistics and packaging challenges are offsetting demand. These factors continue to restrict the company’s ability to rebuild global inventories and meet overall customer demand. Moreover, inefficiencies in supply chain are leading to higher costs. These are expected to impact the company’s financial results in the fiscal third quarter.

The company expects $5-$10 million of adjusted EBITDA pressure in fiscal third-quarter. The company anticipates these factors to stabilize in fiscal fourth quarter. Also, Ashland reaffirmed its adjusted EBITDA guidance for fiscal 2021 at $570-$590 million.

Ashland’s Performance Adhesives segment is also being affected by high raw-material cost and restricted availability. This is impacting the company’s ability to meet customer demand. Ashland is undertaking pricing actions to offset the impact of high raw material costs.

Shares of Ashland have gained 39.2% in the past year against 14.3% fall of the industry.

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Zacks Investment Research

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The company’s results in second-quarter fiscal 2021, were hurt by weather-related disruptions in the U.S. Gulf Coast and changing consumer habits amid the coronavirus pandemic. Ashland’s adjusted earnings at $1.05 per share missed the Zacks Consensus Estimate of $1.36 per share.

Sales were down around 2% year over year to $598 million, missing the Zacks Consensus Estimate of $632.6 million. However, Ashland benefited from improved industrial demand and cost-reduction actions.

Zacks Rank & Key Picks

Ashland currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Nucor Corporation NUE, Olin Corporation OLN and Cabot Corporation CBT.

Nucor has a projected earnings growth rate of around 260% for the current year. The company’s shares have surged 158.1% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olin has an expected earnings growth rate of around 502.9% for the current year. The company’s shares have skyrocketed 266.9% in the past year. It currently sports a Zacks Rank #1.

Cabot has an expected earnings growth rate of roughly 126% for the current fiscal. The company’s shares have surged 72.3% in the past year. It currently carries a Zacks Rank #2 (Buy).

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