3 Stocks Pushing The Chemicals Industry Lower

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.

The Chemicals industry as a whole was unchanged today versus the S&P 500, which was down 0.2%. Laggards within the Chemicals industry included Methes Energies International ( MEIL), down 9.5%, Ikonics ( IKNX), down 2.7%, NL Industries ( NL), down 1.9%, Flexible Solutions International ( FSI), down 2.6% and Gulf Resources ( GURE), down 2.5%.

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

Gulf Resources ( GURE) is one of the companies that pushed the Chemicals industry lower today. Gulf Resources was down $0.05 (2.5%) to $1.92 on light volume. Throughout the day, 21,440 shares of Gulf Resources exchanged hands as compared to its average daily volume of 127,500 shares. The stock ranged in price between $1.91-$1.97 after having opened the day at $1.97 as compared to the previous trading day's close of $1.97.

Gulf Resources, Inc., through its subsidiaries, manufactures and trades in bromine, crude salt, and specialty chemical products in the People's Republic of China. It operates in three segments: Bromine, Crude Salt, and Chemical Products. Gulf Resources has a market cap of $88.7 million and is part of the consumer goods sector. Shares are up 65.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Gulf Resources as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, increase in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from TheStreet Ratings analysis on GURE go as follows:

  • The revenue growth greatly exceeded the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 36.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GURE's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.85, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 24.0% when compared to the same quarter one year prior, going from $4.29 million to $5.32 million.
  • Net operating cash flow has increased to $17.78 million or 38.68% when compared to the same quarter last year. In addition, GULF RESOURCES INC has also vastly surpassed the industry average cash flow growth rate of -94.32%.

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

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At the close, Flexible Solutions International ( FSI) was down $0.03 (2.6%) to $1.10 on light volume. Throughout the day, 21,076 shares of Flexible Solutions International exchanged hands as compared to its average daily volume of 184,700 shares. The stock ranged in price between $1.09-$1.13 after having opened the day at $1.13 as compared to the previous trading day's close of $1.13.

Flexible Solutions International, Inc., together with its subsidiaries, develops, manufactures, and markets specialty chemicals that slow the evaporation of water. Flexible Solutions International has a market cap of $14.5 million and is part of the consumer goods sector. Shares are down 0.3% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Flexible Solutions International a buy, 1 analyst rates it a sell, and none rate it a hold.

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TheStreet Ratings rates Flexible Solutions International as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from TheStreet Ratings analysis on FSI go as follows:

  • The revenue growth greatly exceeded the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 30.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FSI's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FSI has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
  • After a year of stock price fluctuations, the net result is that FSI's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
  • FLEXIBLE SOLUTIONS INTL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FLEXIBLE SOLUTIONS INTL INC reported lower earnings of $0.03 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($0.10 versus $0.03).
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Chemicals industry and the overall market, FLEXIBLE SOLUTIONS INTL INC'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: Flexible Solutions International Ratings Report

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NL Industries ( NL) was another company that pushed the Chemicals industry lower today. NL Industries was down $0.13 (1.9%) to $6.73 on light volume. Throughout the day, 15,699 shares of NL Industries exchanged hands as compared to its average daily volume of 23,800 shares. The stock ranged in price between $6.69-$6.88 after having opened the day at $6.87 as compared to the previous trading day's close of $6.86.

NL Industries, Inc., through its subsidiary, CompX International Inc., operates in the component products industry in the United States and internationally. NL Industries has a market cap of $337.4 million and is part of the consumer goods sector. Shares are down 20.2% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate NL Industries a buy, 1 analyst rates it a sell, and none rate it a hold.

TheStreet Ratings rates NL Industries as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

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Highlights from TheStreet Ratings analysis on NL go as follows:

  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.42, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Commercial Services & Supplies industry and the overall market on the basis of return on equity, NL INDUSTRIES has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for NL INDUSTRIES is currently lower than what is desirable, coming in at 33.95%. Regardless of NL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NL's net profit margin of 36.00% significantly outperformed against the industry.
  • NL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.21%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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

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