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3 Stocks Raising The Chemicals Industry Higher

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 8 points (0.0%) at 16,855 as of Friday, June 27, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,722 issues advancing vs. 1,261 declining with 166 unchanged.

The Chemicals industry as a whole closed the day up 0.4% versus the S&P 500, which was up 0.1%. Top gainers within the Chemicals industry included NL Industries ( NL), up 4.2%, Lightbridge ( LTBR), up 2.7%, Ceres ( CERE), up 3.8%, KMG Chemicals ( KMG), up 2.8% and BioAmber ( BIOA), up 5.3%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

KMG Chemicals ( KMG) is one of the companies that pushed the Chemicals industry higher today. KMG Chemicals was up $0.48 (2.8%) to $17.50 on light volume. Throughout the day, 11,096 shares of KMG Chemicals exchanged hands as compared to its average daily volume of 18,100 shares. The stock ranged in a price between $16.92-$17.66 after having opened the day at $16.92 as compared to the previous trading day's close of $17.02.

KMG Chemicals, Inc., through its subsidiaries, is engaged in the manufacture, formulation, and distribution of specialty chemicals primarily in the United States, Canada, Mexico, Europe, and Asia. It operates in two segments, Electronic Chemicals and Wood Treating Chemicals. KMG Chemicals has a market cap of $209.3 million and is part of the basic materials sector. Shares are up 0.8% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates KMG Chemicals a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates KMG Chemicals as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from TheStreet Ratings analysis on KMG go as follows:

  • The revenue growth came in higher than the industry average of 11.1%. Since the same quarter one year prior, revenues rose by 40.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 1424.27% to $14.13 million when compared to the same quarter last year. In addition, KMG CHEMICALS INC has also vastly surpassed the industry average cash flow growth rate of 35.32%.
  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
  • KMG CHEMICALS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, KMG CHEMICALS INC reported lower earnings of $0.82 versus $1.23 in the prior year. For the next year, the market is expecting a contraction of 2.4% in earnings ($0.80 versus $0.82).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Chemicals industry. The net income has significantly decreased by 57.2% when compared to the same quarter one year ago, falling from $2.87 million to $1.23 million.

You can view the full analysis from the report here: KMG Chemicals Ratings Report

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