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Koppers Holdings Down to Strong Sell on Weak Q4 & Outlook

Zacks Investment Research downgraded Koppers Holdings Inc. KOP to a Zacks Rank #5 (Strong Sell) on Apr 6, 2016. Going by the Zacks model, companies carrying a Zacks Rank #5 have strong chances of underperforming the broader market in the near term.

Why the Downgrade?

Koppers Holdings’ financial performance in fourth-quarter 2015 was disappointing, as earnings of 13 cents per share fell short of the Zacks Consensus Estimate of 31 cents by 58.1%. Also, the top line decreased 14.8% year over year, triggered by a decline in sales volume for carbon pitch and carbon black feedstock, weak pricing for carbon black feedstock, naphthalene, and phthalic anhydride and negative impacts of foreign currency movements.

For 2016, Koppers Holdings expects revenues to be approximately $1.5 billion, down from $1.6 billion in 2015 due to weakness in railroad and utility products and services (RUPS) and carbon materials and chemicals (CMC) businesses. Also, adverse foreign currency movements will impact sales growth.

Disappointment over weak results and the cautious outlook triggered a downward revision in earnings estimates for Koppers Holdings. Over the last 60 days, the Zacks Consensus Estimate for earnings has decreased 69.2% to 8 cents per share for first-quarter 2016, 8.4% to $1.86 per share for 2016 and 16.9% to $2.41 per share for 2017.

Stocks to Consider

Though Koppers Holdings with a current market capitalization of $449 million is off investors’ radar, there are some chemical stocks with higher investment values. Some stocks sporting a Zacks Rank #1 (Strong Buy) include Arkema S.A. ARKAY, The Dow Chemical Company DOW and Sinopec Shanghai Petrochemical Co. Ltd. SHI.

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KOPPERS HOLDNGS (KOP): Free Stock Analysis Report
 
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SHANGHAI PETROC (SHI): Free Stock Analysis Report
 
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