NEW YORK (TheStreet) -- Huntsman (HUN - Get Report) stock is declining by 26.82% to $10.18 on heavy trading volume on Monday, after the company listed several factors that will impact its third quarter earnings, including lower prices and falling demand.
Titanium dioxide prices declined, while demand in the Asia Pacific region remained soft, the Salt Lake City-based chemicals manufacturer said on Friday after the market close.
Additionally, Huntsman expects its margins to shrink due to lower oil prices and delayed benefits from cheaper raw materials.
"Lower raw material prices impacted demand and margins in the third quarter, thus the accounting benefits will be delayed into the fourth quarter," CEO Peter Huntsman said in a statement. "We expect our fourth quarter adjusted EBITDA to look similar to the third quarter ... and expect that it will also be in the range of prior year results of $300 million.
The company also reiterated its plans to separate its pigments and additives business by the end of 2016.
So far today, 8.54 million shares of Huntsman have exchanged hands, compared with its average daily volume of 3.41 million.
Separately, TheStreet Ratings team rates HUNTSMAN CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate HUNTSMAN CORP (HUN) 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 reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 194.00% to $147.00 million when compared to the same quarter last year. In addition, HUNTSMAN CORP has also vastly surpassed the industry average cash flow growth rate of -3.74%.
- HUNTSMAN CORP 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. 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, HUNTSMAN CORP increased its bottom line by earning $1.34 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $1.34).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Chemicals industry and the overall market, HUNTSMAN CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- 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 75.6% when compared to the same quarter one year ago, falling from $119.00 million to $29.00 million.
- You can view the full analysis from the report here: HUN