Why Kraton Performance Polymers (KRA) Stock Is Gaining Today

NEW YORK (TheStreet) -- Shares of Kraton Performance Polymers Inc. (KRA) are up 1.03% to $22.28 on Monday after its board said it notified LCY Chemical of its intention to withdraw its recommendation that shareholders approve an agreement to combine with LCY's Styrenic block polymer business.

The notice from the Kraton Board cited the decline in the operating results for LCY's SBC business in the first quarter of 2014.

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TheStreet Ratings team rates KRATON PERFORMANCE POLYMERS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate KRATON PERFORMANCE POLYMERS (KRA) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins."

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

  • The debt-to-equity ratio is somewhat low, currently at 0.69, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Net operating cash flow has significantly decreased to -$53.59 million or 157.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 111.0% when compared to the same quarter one year ago, falling from -$3.75 million to -$7.91 million.
  • You can view the full analysis from the report here: KRA Ratings Report
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