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Ashland Beefs Up Dividend

Zacks Equity Research

Ashland Inc. (ASH) remains committed to deliver incremental value to its shareholders. The specialty chemicals maker, best known for its Valvoline automotive lubricants, said that its Board has approved a roughly 51% raise in its quarterly dividend to 34 cents per share from 22.5 cents. Annualized, this represents a payout of $1.36 per share. The revised dividend is payable on Jun 15, 2013, to shareholders of record as of May 31, 2013.

Separately, Ashland’s Board approved a new share repurchase program worth $600 million. The new authorization, which is effective immediately, replaces the company’s earlier repurchase program which had roughly $330 million remaining. Around $150 million of shares are expected to be bought back through an accelerated repurchase program to be initiated on or before May 31, 2013. The new buyback program will expire on Dec 31, 2014.

The twin announcement reflects Ashland’s ability to generate strong cash flows. Its cash flow from operating activities zoomed roughly eight-and-a-half fold year over year in the first-half of fiscal 2013.    

Ashland makes nickel and cobalt-based alloys in sheet, coil and plate forms. Its Consumer Markets segment markets Valvoline, the world’s first lubricating oil. It also operates the Valvoline Instant Oil Change, the nation’s second-largest franchised quick-lube chain. Ashland offers specialty chemicals in more than 100 countries.

Ashland, last month, reported second-quarter fiscal 2013 (ended Mar 31, 2013) adjusted earnings (excluding one-time items) from continuing operation of $1.78 per share, outshining the Zacks Consensus Estimate of $1.56.

Profit from continuing operations, as reported, fell roughly 39% year over year to $55 million of 68 cents a share. Revenues fell 5% year over year to $1,974 million, missing the Zacks Consensus Estimate of $2,057 million. The company was challenged by weakness across a number of key regions, especially Europe. It witnessed lower sales across each of its business segments in the quarter on lower demand.

Ashland currently carries a short-term Zacks Rank #5 (Strong Sell).
Other companies in the chemical industry that are worth considering include Shin-Etsu Chemical Co., Ltd. (SHECY), Methanex Corp. (MEOH) and Celanese Corporation (CE). All of them retain a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on ASH

Read the Full Research Report on MEOH

Read the Full Research Report on CE

Read the Full Research Report on SHECY

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