Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

A. Schulman (SHLM) Down to Strong Sell on Weak Q2 & View

Zacks Investment Research downgraded A. Schulman, Inc. SHLM to a Zacks Rank #5 (Strong Sell) on Apr 8, 2016. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market.

Why the Downgrade?

Market sentiments have gone against A. Schulman since the beginning of 2016, as evident from the 17.6% fall in the company’s share price year to date. Also, the company’s second-quarter fiscal 2016 (ended Feb 29, 2016) results failed to impress shareholders, as the stock price fell nearly 3.9% since the release on Apr 5. A brief snapshot of the company’s quarterly results will explain the resentment among investors.  

Adjusted earnings of 31 cents per share came in 20.5% below the year-ago figure of 39 cents per share. However, the bottom line managed to surpass the Zacks Consensus Estimate of 27 cents. Excluding negative impacts of foreign currency translation and gains from the Citadel acquisition, A. Schulman's revenues in the quarter declined 3.1% year over year.

For fiscal 2016, A. Schulman expects weakness in the oil & gas markets and the global economy to restrict its top-line growth. The company predicts earnings to be $2.40−$2.45 per share, lower than $2.80−$2.85 per share projected initially.

A dismal performance and weak outlook have made investors skeptical about A. Schulman’s prospects. Over the last 30 days, the Zacks Consensus Estimate has fallen 12.5% to $2.38 per share for fiscal 2016 and 9.1% to $2.98 per share for fiscal 2017. Also, the company has an Earnings ESP of -3.36% for fiscal 2017.

Stocks to Consider

Though A. Schulman with a current market capitalization of $734 million is off investors’ radar, there are some chemical stocks with higher investment values. Better-ranked stocks include Arkema S.A. ARKAY, Sinopec Shanghai Petrochemical Co. Ltd. SHI and Trinseo SA TSE. While both Arkema S.A. and Sinopec Shanghai Petrochemical sport a Zacks Rank #1 (Strong Buy), Trinseo SA carries a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ARKEMA-ADR (ARKAY): Free Stock Analysis Report
 
SHANGHAI PETROC (SHI): Free Stock Analysis Report
 
SCHULMAN(A) INC (SHLM): Free Stock Analysis Report
 
TRINSEO SA (TSE): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research