Huntsman (HUN) Down 5.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Huntsman (HUN). Shares have lost about 5.3% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Huntsman’s Earnings Miss, Sales Beat Estimates in Q4
Huntsman slipped to a loss of $91 million or 48 cents per share in the fourth quarter of 2022 from a profit of $597 million or $2.73 in the year-ago quarter.x`
Barring one-time items, adjusted earnings per share fell 96% to 4 cents in the reported quarter from 89 cents reported in the year-ago quarter. The bottom line lagged the Zacks Consensus Estimate of 11 cents.
Revenues were $1,650 million, down around 22% year over year. The top line, however, beat the Zacks Consensus Estimate of $1,556.9 million.
Polyurethanes: Revenues from the segment fell 23% year over year to $1,071 million in the reported quarter, hurt by reduced sales volumes and unfavorable currency translation, partly offset by higher MDI (methylene diphenyl diisocyanate) average selling prices. Volumes fell mainly due to lower demand, especially in European and American markets.
Performance Products: Revenues fell 25% to $307 million courtesy of lower sales volumes resulting from weak demand for certain products, which were partially offset by higher average selling prices resulting from a rise in raw material costs.
Advanced Materials: Revenues from the unit went down 12% to $278 million primarily due to lower sales volume resulting from weak demand prevailing in the industrial market and the deselection of lower margin businesses. These headwinds were offset by higher demand in the aerospace market, rise in average selling prices and improvement in the sales mix.
Earnings for full-year 2022 were $2.27 per share compared with $4.72 a year ago. Net sales rose 5% to $8,023 million.
Huntsman had total cash of $654 million at the end of the quarter, down around 37% year over year. Long-term debt amounted to $1,671 million, up roughly 9%.
Net cash provided by operating activities from continuing operations was $297 million in the reported quarter. Free cash flow from continuing operations was $211 million compared with $648 million in the year-ago quarter.
Huntsman expects its business fundamentals to improve as it sees higher demand in aerospace and automotive business and expects consumer destocking to end in the first half of 2023. However, the company expects its performance in the second half to be soft, as it is still seeing weakness in the global construction market.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -60.04% due to these changes.
At this time, Huntsman has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Huntsman has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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