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Huntsman (HUN) Down 14% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Huntsman (HUN). Shares have lost about 14% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Huntsman due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Huntsman’s Q1 Earnings Top, Revenues Trail Estimates

Huntsman recorded profits of $119 million or 51 cents per share in first-quarter 2019, down from $274 million or $1.11 in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 46 cents in the quarter, down from 96 cents a year ago. The figure surpassed the Zacks Consensus Estimate of 41 cents.

Revenues were $2,034 million, down around 11% year over year. Also, it missed the Zacks Consensus Estimate of $2,104 million. The company witnessed lower sales across its businesses in the quarter.

Segment Highlights

Polyurethanes: Revenues in the segment fell around 13% year over year to $1,067 million due to lower MDI and MTBE average selling prices, partly offset by higher MDI sales volumes.

Performance Products: Revenues in the unit dropped 10% to $540 million, hurt by lower sales volumes due to weak market conditions and reduced average selling prices.

Advanced Materials: Revenues in the unit decreased around 3% to $272 million due to lower average selling prices.

Textile Effects: Revenues in the division were down roughly 6% to $189 million. Results were impacted by lower sales volumes that more than offset higher average selling prices. Volumes were affected by reduced demand as a result of uncertainties surrounding the U.S.-China trade conflict.

Financials

Huntsman had total cash of $444 million at the end of the quarter, down 2% year over year. Long-term debt was $2,323 million, up around 1% year over year. Net cash used in operating activities was $31 million for the quarter compared with net cash provided by operating activities of $111 million a year ago.

The company repurchased around 1.5 million shares worth roughly $34 million in the quarter.

Outlook

Going forward, Huntsman said that it will continue to execute its strategy to expand its downstream businesses through strategic investments, new products and continued globalization of recent bolt-on acquisitions. The company will also continue its balanced approach to capital allocation including share buybacks.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -9.17% due to these changes.

VGM Scores

At this time, Huntsman has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Huntsman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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