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Why Should You Add W. R. Grace (GRA) to Your Portfolio Now?

Zacks Equity Research

W. R. Grace & Co.’s GRA stock looks promising at the moment. The company has seen its shares pop around 19% year to date.

We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let's see what makes this chemical company an attractive investment option at the moment.

Solid Rank & VGM Score

W. R. Grace currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

Price Performance

W. R. Grace has outperformed the industry it belongs to over a year. The company’s shares have gained 17% compared with a roughly 7.5% rise recorded by the industry. The company has also outpaced the S&P 500’s rise of 8.4% for the same period.


Positive Earnings Surprise History

W. R. Grace has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of roughly 12.2%.

Estimates Going Up

Earnings estimate revisions have the greatest impact on stock prices. Annual estimates for W. R. Grace have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2019 has increased by around 1.1%. The Zacks Consensus Estimate for 2020 has also moved up 1.8% over the same timeframe.

Growth Prospects

The Zacks Consensus Estimate for earnings for 2019 for W. R. Grace is currently pegged at $4.57 per share, reflecting an expected year-over-year growth of 10.4%. The same for 2020 stands at $5.16, indicating a year-over-year growth of 13%. The stock also has a long-term expected earnings per share growth rate of roughly 12%, higher than the industry average of 10.5%.

Revenues for 2019 are also expected to increase 5.7% year over year as the Zacks Consensus Estimate for the year is $2.04 billion. Revenues are also expected to register a 5.6% growth in 2020.

Upbeat Outlook

W. R. Grace delivered double-digit sales and earnings growth in 2018 on the back of its growth investments and actions to extend its competitive advantages. The results were also aided by strong customer demand for the company’s catalyst and process technology solutions and silicas technologies as well as the polyolefin catalysts acquisition.

The company, in its fourth-quarter call, noted that it is upbeat about 2019 and sees another year of strong demand for its high-value technologies. The company expects higher margins and double-digit growth in adjusted earnings per share in 2019.

W. R. Grace expects sales growth of 6-7% in 2019 with sustained strong demand across its portfolio. It also sees adjusted earnings of $4.53-$4.63 per share for the year, up 10-12% year over year.

W.R. Grace & Co. Price and Consensus


W.R. Grace & Co. Price and Consensus | W.R. Grace & Co. Quote

Other Stocks to Consider

Other stocks worth considering in the basic materials space include Kirkland Lake Gold Ltd. KL, Innospec Inc. IOSP and Ingevity Corporation NGVT.

Kirkland Lake has an expected earnings growth rate of 46.3% for the current year and carries a Zacks Rank #1. The company’s shares have surged around 85% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Innospec has an expected earnings growth rate of 3.5% for the current year and carries a Zacks Rank #1. The company’s shares are up around 20% over the past year.  

Ingevity has an expected earnings growth rate of 17.9% for the current year and carries a Zacks Rank #2. Its shares have rallied roughly 45% in the past year.

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