Koppers Holdings Inc.
’s
KOP
stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this global provider of wood treatment chemicals, treated wood products and carbon compounds an intriguing choice for investors right now.
What Makes KOP an Attractive Pick?
Solid Rank & VGM Score
Koppers has a Zacks Rank #1 (Strong Buy) and a
VGM Score
of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.
An Outperformer
Shares of Koppers have rallied 57.8% over the past six months against the 35.2% rise of its
industry
. It has also outperformed the S&P 500’s 22.5% rise over the same period.
Estimates Northbound
Earnings estimate revisions have the greatest impact on stock prices. Over the past month, the Zacks Consensus Estimate for Koppers for the current year has increased around 12.3%. The consensus estimate for 2021 has also been revised 11.5% upward over the same time frame.
Healthy Growth Prospects
The Zacks Consensus Estimate for current-year earnings for Koppers is currently pegged at $3.84, reflecting an expected year-over-year growth of 16%. Moreover, earnings are expected to register a 11.3% growth in 2021.
Superior Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Koppers is 42.1%, above the industry’s level of 9%.
Attractive Valuation
Valuation looks attractive as Koppers’ shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Koppers is currently trading at trailing 12-month EV/EBITDA multiple of 6.89, cheaper compared with the industry average of 9.47.
Strong Q3 and Buoyant Outlook
Koppers saw its profits surge nearly four fold to $75.6 million or $3.53 per share in the third quarter of 2020 from a profit of $19.9 million or 94 cents a year ago. Adjusted earnings of $1.64 per share for the quarter also rose from $1.16 per share a year ago and topped the Zacks Consensus Estimate of $1.29.
Revenues of $437.5 million rose 0.8% year over year and also surpassed the Zacks Consensus Estimate of $425.8 million. Sales were driven by favorable impacts of currency swings. The company also benefited from sustained demand for copper-based preservatives in the United States and pent-up demand in international markets. It also saw improved demand for utility poles in Australia and crosstie disposal services in the United States in the third quarter.
The Pennsylvania-based company also raised its earnings outlook for 2020. It now sees adjusted earnings per share for 2020 in the band of $3.65-$3.90, up from its prior expectation of $3.25-$3.50. The company also increased its adjusted EBITDA guidance to the band of $204-$210 million for the year from its earlier view of $196-$204 million.
Koppers is witnessing strong demand for residential wood treatment preservatives in most geographic regions. The company also plans to cut debt by around $125 million in 2020 leveraging strong cash flows and improved working capital management.
Koppers Holdings Inc. Price and Consensus
Koppers Holdings Inc. price-consensus-chart
|
Koppers Holdings Inc. Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited
AEM
, Barrick Gold Corporation
GOLD
and Pretium Resources Inc.
PVG
.
Agnico Eagle has a projected earnings growth rate of 103.1% for the current year. The company’s shares have gained around 11% in a year. It currently sports a Zacks Rank #1. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Barrick Gold has an expected earnings growth rate of 115.7% for the current year. The company’s shares have surged around 42% in the past year. It currently carries a Zacks Rank #2.
Pretium Resources has an expected earnings growth rate of 25.5% for the current year. The company’s shares have gained around 21% in the past year. It currently carries a Zacks Rank #2.
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