Unfortunately, with the Zacks Chemical-Diversified Industry at the bottom 9% of over 250 Zacks industries, Huntsman Corporation’s HUN stock lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Although Huntsman is among the world’s largest manufacturers of differentiated and commodity chemical products, short-term weakness is still on the horizon and investors will want to be cautious at the moment.
Weaker Industry Outlook
One of the first signs of ensuing weakness for an industry or stock is declining earnings estimates and Huntsman has joined 12 other companies in the Zacks Chemical-Diversified Industry that have seen negative estimate revisions over the last quarter with only one seeing positive estimate revisions.
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For Huntsman, annual earnings estimates have dropped -13% over the last 30 days as the company wraps up its fiscal 2023 with Q4 results expected in late February. More disheartening is that FY24 EPS estimates are down -9% over the last month.
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The souring FY24 earnings outlook comes as investors are hoping Huntsman can get its post-pandemic growth and recovery back on track.
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Diluted Valuation
Declining earnings estimates are also taking away from Huntsman's appeal as a potential value stock with the company being a chemical products leader. This factor looks less appealing with Huntsman's stock trading at 22.3X forward earnings and 59% above the industry average of 14X.
Image Source: Zacks Investment Research
Final Thoughts
With Huntsman's stock now down a grizzly -23% over the last year it's still too soon to bite on the dip as the frustrating start to 2024 may continue. The weaker earnings outlook for the Zacks Chemical-Diversified Industry paints a cautionary tale for these stocks with Huntsman’s being a prime example.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
