LyondellBasell Industries N.V. LYB is among the biggest plastics, chemical and refining companies globally. The company is poised to gain from its expansion projects. The buyout of A. Schulman is also expected to create significant cost synergies.
Shares of LyondellBasell, which currently carries a Zacks Rank #3 (Hold), have lost 25.2% in the past year compared with the industry’s 27.2% decline.
In October 2018, LyondellBasell stated that it expects to drive operational and business improvements in Refining, Technology as well as Intermediates and Derivatives businesses in the fourth quarter. The company is poised to benefit from increased access to markets, incremental synergies from the integration of A. Schulman acquisition and formation of the Advanced Polymer Solutions segment.
The company is on track with the construction of a High Density Polyethylene (HDPE) plant on the U.S. Gulf Coast that will employ its proprietary Hyperzone PE technology. The facility is scheduled for startup in mid-2019 and will have an annual capacity of 1.1 billion pounds.
The company is also building a world scale plant on the U.S. Gulf Coast for producing propylene oxide (PO) and tertiary butyl alcohol (TBA). The facility will have annual capacity of 1 billion pounds of PO and 2.2 billion pounds of TBA and its derivatives.
The company has also acquired A. Schulman in a deal worth $2.25 billion. The move has created a premier global provider of advanced polymer solutions with extensive geographic reach, leading technologies and a diverse product portfolio. The buyout doubles the size of LyondellBasell's existing compounding business and creates a platform for future growth with reach into additional high-growth markets. The company expects to capture $150 million in run-rate cost synergies within two years.
However, LyondellBasell’s operations are subject to maintenance outages, which are affecting results. The company expects roughly $25-million impact from downtime associated with planned maintenance at its German cracker in the fourth quarter of 2018.
Moreover, maintenance at one of its propylene oxide plants in Texas reduced EBITDA by roughly $20 million in the third quarter and is expected to lower margins by roughly $25 million in the fourth quarter. Planned maintenance at the company’s refinery impacted EBITDA by around $20 million in the third quarter and is expected to hurt margins by $45 million in the fourth quarter.
LyondellBasell Industries N.V. Price and Consensus
LyondellBasell Industries N.V. Price and Consensus | LyondellBasell Industries N.V. Quote
Stocks to Consider
A few better-ranked stocks in the basic materials space are Ingevity Corporation NGVT, sporting a Zacks Rank #1 (Strong Buy); along with CF Industries Holdings, Inc. CF and Cameco Corporation CCJ, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingevity has an expected earnings growth rate of 21.5% for 2019. The company’s shares have gained 14.5% in the past year.
CF Industries has an expected earnings growth rate of 70.5% for 2019. The company’s shares have moved up 3% in the past year.
Cameco has an expected earnings growth rate of 20% for 2019. Its shares have rallied 24.6% in a year’s time.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
LyondellBasell Industries N.V. (LYB) : Free Stock Analysis Report
Ingevity Corporation (NGVT) : Free Stock Analysis Report
CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
Cameco Corporation (CCJ) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research