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Here's Why Trecora Resources (TREC) Needs to be Dumped

Zacks Equity Research

Zacks Investment Research downgraded Trecora Resources TREC to a Zacks Rank #5 (Strong Sell) on Mar 8, 2016. Going by the Zacks model, companies carrying a Zacks Rank #5 have strong chances of underperforming the broader market over the next few quarters.

Why the Downgrade?

Trecora Resources failed to impress investors in 2015, as is evident from its annual return of a negative 21.5%. Also, the company’s financial results for fourth-quarter 2015 failed to lift spirits, with the share price falling roughly 2.6% since Mar 3.

Last quarter, Trecora Resources’ earnings of 5 cents per share were below the year-ago tally of 9 cents. Earnings were hurt by an 8 cent per share loss in equity in the Al Masane Al Kobra Mining Company (“AKAM”). Adjusting for this one-time item, the company’s adjusted earnings were 13 cents. Revenue was down 18.4% year over year, triggered by weak sales in the Petrochemical & Product and Processing Fees businesses.

Disappointing quarterly results made investors cautious of Trecora Resources’ future prospects. Over the last 30 days, the Zacks Consensus Estimate has decreased 4.6% to $1.04 per share for 2016; the consensus estimate has however remained unchanged at $1.81 per share for 2017. Also, the company has an Earnings ESP of -50.00% for first-quarter 2016.

Stocks to Consider

Trecora Resources has a current market capitalization of $238 million. Not all stocks are doing as badly as Trecora Resources in the chemical industry. Some better-ranked stocks include Daqo New Energy Corp. DQ, Ferroglobe PLC GSM and Flexible Solutions International Inc. FSI. While Daqo New Energy sports a Zacks Rank #1 (Strong Buy), both Ferroglobe and Flexible Solutions International carry a Zacks Rank #2 (Buy).

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TRECORA RESRCS (TREC): Free Stock Analysis Report
 
FERROGLOBE PLC (GSM): Free Stock Analysis Report
 
DAQO NEW ENERGY (DQ): Free Stock Analysis Report
 
FLEXIBLE SOLTNS (FSI): Free Stock Analysis Report
 
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