Chemtura Corporation (CHMT) analysts move earnings estimates higher.
Company Description
Chemtura Corporation, manufactures specialty chemical solutions and consumer products. The company’s Consumer Products segment provides recreational water purification products, such as sanitizers, algaecides, biocides, oxidizers, pH balancers, mineral balancers, and other specialty chemicals and accessories.
Moving from a #5 to a #1
The Zacks Rank is the foundation of our research, with a Zacks #1 Rank (Strong Buy) being much more attractive than a Zacks #5 Rank (Strong Sell). On occasion, stocks will move from a #5 to a #1 over time, an indication that the bad news has been baked into the stock.
Chemtura Corp is one such stock that has seen its ranking move dramatically over the last year, in part due international expansion in India and China. The company announced two major initiatives in the developing countries that will expand reach and resources. Since those May and June announcements, the company signed a major customer and announced a share repurchase program.
Buying Back Stock
In October of 2011, the company initiated a repurchase program funded with $50 million. The mid October announcement came shortly after the stock reached 52 week lows, and subsequently saw a 50% run from the a low of $8.49 to more than $12.50 per share.
Management sees growth returning
Management has recently noted that while the first quarter of 2012 may see challenges, the second quarter is shaping up to be a good one. This longer term visibility is another aspect that gives us confidence in the stock.
3 Quarter Earnings Surprise Streak
Over the last three quarters, the company has posted a positive earnings surprise when compared to the Zacks Consensus Earnings Estimate. With minimal surprises ($0.01) registered in the last two quarters, the March 2011 quarter saw a $0.04 surprise. Continued positive earnings surprises should lead to share price appreciation.
The Chart
Having been stuck in a tight range over the last few quarters, CHMT is looking for another quarter or two of positive earnings. With the management indication of 2Q12 sales visibility, the stock could return to its recent highs.
Brian Bolan is an Aggressive Growth Stock Strategist for Zacks.com.
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