NEW YORK (TheStreet) -- Huntsman (HUN - Get Report) shares are down 5.1% to to $21.79 on Friday after the company announced that it was planning to close one of its European plants due to weak demand for titanium dioxide pigment which is used in paints and plastics.
The company may end up having to pay up to $124 million to close the plant, which produces 100,000 tons of titanium dioxide annually, company CFO Kimo Esplin said.
Closing the plant will eliminate 900 jobs and the company's pigment business is expected to break even this year, according to Bloomberg. The company will be able to recover from the cost of the closure in two to three years, Esplin said.
TheStreet Ratings team rates HUNTSMAN CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HUNTSMAN CORP (HUN) a BUY. This is driven by multiple 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 compelling growth in net income, revenue growth, attractive valuation levels, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 193.8% when compared to the same quarter one year prior, rising from $64.00 million to $188.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 1.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, HUNTSMAN CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- You can view the full analysis from the report here: HUN Ratings Report