3 Stocks Pushing The Chemicals Industry Lower

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The Chemicals industry as a whole closed the day up 0.1% versus the S&P 500, which was down 0.3%. Laggards within the Chemicals industry included Ikonics ( IKNX), down 5.5%, Lightbridge ( LTBR), down 3.7%, China Green Agriculture ( CGA), down 4.1%, CVR Partners ( UAN), down 1.6% and Braskem ( BAK), down 3.1%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

Braskem ( BAK) is one of the companies that pushed the Chemicals industry lower today. Braskem was down $0.43 (3.1%) to $13.47 on average volume. Throughout the day, 289,233 shares of Braskem exchanged hands as compared to its average daily volume of 280,500 shares. The stock ranged in price between $13.44-$13.88 after having opened the day at $13.86 as compared to the previous trading day's close of $13.90.

Braskem S.A., together with its subsidiaries, produces and sells thermoplastic resins. Braskem has a market cap of $5.6 billion and is part of the basic materials sector. Shares are down 22.1% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Braskem a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Braskem as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on BAK go as follows:

  • The debt-to-equity ratio is very high at 2.82 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, BAK has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The gross profit margin for BRASKEM SA is rather low; currently it is at 16.15%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.23% significantly trails the industry average.
  • Net operating cash flow has significantly decreased to $283.87 million or 65.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BAK has underperformed the S&P 500 Index, declining 8.61% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Chemicals industry and the overall market, BRASKEM SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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

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