The Chemours Company CC is benefiting from higher demand for its Opteon refrigerants, strong execution, higher pricing and cost-cutting measures amid headwinds including raw material cost inflation.
The company’s shares are down 9.4% over a year, compared with a 8.9% decline recorded by its industry.
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Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Favoring CC?
Chemours is gaining from strong execution and its cost-reduction and pricing actions. Its Thermal & Specialized Solutions segment is benefiting from healthy demand in refrigerants. It is witnessing strong adoption of the Opteon platform, which is supporting volumes in this segment. Chemours remains committed toward driving Opteon adoption. Higher prices are also contributing to the segment’s sales. CC is also seeing higher prices in the Titanium Technologies division as witnessed in 2022.
Chemours is also gaining from its efforts to reduce costs. Its cost-reduction program along with its productivity and operational improvement actions across its businesses are expected to support its margins in 2023. It is also taking appropriate pricing measures to counter higher costs.
The company also remains focused on boosting its cash flows and returning value to shareholders. It generated cash from operating activities of $754 million and free cash flow of $447 million in 2022. It also paid dividends worth $154 million and returned $495 million through share repurchases during the year. Chemours expects to generate free cash flow of more than $350 million in 2023
A Few Concerns
Chemours is exposed to headwinds from global logistics and supply-chain issues. It is being challenged by raw material cost inflation due to supply constraints. Supply-chain challenges and raw material availability issues are likely to continue moving ahead. Headwinds from raw material, logistics and energy costs are likely to persist in the near term.
Demand softness in Europe and Asia is another concern. The Titanium Technologies unit faced volume pressure in the fourth quarter due to weak demand in these regions. Volumes of the segment dropped 35% year over year in the quarter, hurting sales of the division. Weak economic conditions in Europe and Asia are likely to continue to impact demand and volumes in the first quarter of 2023.
The Chemours Company Price and Consensus
The Chemours Company price-consensus-chart | The Chemours Company Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, Olympic Steel, Inc. ZEUS and Yamana Gold Inc. AUY.
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 37.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3%, on average. STLD has gained around 32% in a year.
Olympic Steel currently sports a Zacks Rank #1. The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 60.6% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 26.2%, on average. ZEUS has rallied around 39% in a year.
Yamana Gold currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AUY’s current-year earnings has been revised 3.8% upward in the past 60 days.
Yamana Gold beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 22.5% on average. AUY’s shares have gained roughly 6% in the past year.
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