EMN

More Consolidation in Industrial Gas Industry: Praxair and Linde

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By Kris Rosemann Praxair (PX) and Linde (LNEGY) have finally agreed to tie the knot. After two years of on-and-off negotiations, and a good deal of demand headwinds, the second and third largest industrial gas companies in terms of annual sales have signed a nonbinding agreement to a merger of equals. This isn’t the first we’ve seen of consolidation near the top of the industrial gas space, however, after the completion of Air Liquide’s (AIQUY) purchase of Airgas for ~$13 billion in May 2016 pushed it past Linde as the big kahuna in the industry in terms of annual sales. Despite a return to the top spot in the industry, the deal might be too late in helping the firms … Read more

The Story of Chemical Giants: Sales Down, Margins Up

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Chemical bellwethers’ second-quarter results reflect the impact of unfavorable commodity prices and demand, but cost cutting efforts and savvy execution are driving margins higher. Let’s go around the horn for incremental industry insights across the space. Dow Chemical is executing the best at the moment. DuPont (DD), Dow Chemical (DOW), and Eastman Chemical (EMN) all reported negative impacts from pricing on their top lines in the calendar second period. DuPont’s Performance Chemicals segment, which was spun-off into The Chemours Company (CC) on July 1, reported the largest negative impact for the company with pricing lowering sales by 6% in the period. Each of Dow Chemical’s operating segments experienced sales falling due to pricing, the largest of which came in its … Read more

4 Opportunistic Stocks To Consider Buying in 2015

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The Valuentum Buying Index (VBI) is a philosophy that considers the valuation of a company and the likelihood that a company’s stock will converge to a cash-flow derived fair value estimate. The VBI accepts the view that value is based on the sum of a company’s future expected discounted free cash flows and the excess cash on its balance sheet, while acknowledging that market participants must eventually agree with a firm’s underpricing (and buy the stock) in order to drive the stock’s price to fair value. An underpriced stock with no buying support is not poised to generate good returns, nor is an overpriced stock with good momentum as it will eventually succumb to panic selling once euphoria fades. Stocks … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

PPG Posts Record Third Quarter Results; Our Favorite Idea in the Chemicals Industry

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Our favorite fundamental chemical idea PPG Industries (PPG) reported record third-quarter results Thursday. Net sales jumped 17% versus the prior year (about 4% organic expansion), and the firm posted record adjusted earnings per diluted share from continuing operations of $2.44, up an impressive 30%+ from the year-ago period (shown right). We liked the operating leverage inherent in performance as well as the firm’s ability to hit the ground running with impactful transactions. The company noted that aerospace and automotive OEM coatings, both up about 10%, were the key drivers behind PPG’s top-line expansion, though other business lines did contribute as well, including the company’s architectural coatings operations. Volume trends improved in all regions of the world, and the firm’s cost-reduction … Read more

Excellent Third-Quarter Results from Eastman Chemical

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Eastman Chemical (EMN) recently posted an impressive third quarter. Earnings per share was relatively flat, with net income down slightly. Revenue was up nearly 5%, but the high raw material costs prevented any margin expansion. Regardless, these numbers were higher than expected, and Eastman Chemical was able to navigate one of the most challenging macroeconomic quarters in recent memory effectively. The revenue mix is still slightly tilted in favor of North America; however, earnings are higher overseas and we expect the continued build outs in Korea and acetate tow demand in Asia to continue to be key business drivers, as they were in the third quarter. Eastman also continues to invest in the future via strategic acquisitions. In the third quarter, the firm acquired … Read more

How to Think About Corporate Tax Reform

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