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Why LSB Industries (LXU) Stock Jumped This Afternoon

NEW YORK (TheStreet) -- Shares of LSB Industries Inc. (LUX) closed higher by 2.94% to $40.94 on Wednesday after the company announced it formed a strategic committee to help review the possibilities of separating business units, and placing some or all of its chemical business into an MLP structure, according to the company's SEC filing.

LSB Industries is a holding company and through its wholly owned subsidiaries owns chemical and climate control businesses.

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Separately, TheStreet Ratings team rates LSB INDUSTRIES INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate LSB INDUSTRIES INC (LXU) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, compelling growth in net income, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LXU's revenue growth has slightly outpaced the industry average of 11.2%. Since the same quarter one year prior, revenues rose by 18.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 17219.1% when compared to the same quarter one year prior, rising from -$0.07 million to $11.64 million.
  • Net operating cash flow has significantly increased by 200.33% to $20.24 million when compared to the same quarter last year. In addition, LSB INDUSTRIES INC has also vastly surpassed the industry average cash flow growth rate of 39.55%.
  • You can view the full analysis from the report here: LXU Ratings Report
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