Solutia Inc. (SOA) has surprised on estimates 3 out of the last 4 quarters by an average of 8.34%. SOA is trading with a forward P/E of 12.75.
Company Description
Solutia manufactures specialty chemicals including Saflex, an interlayer for laminated glass, CPFilms aftermarket window films, the Flexsys family of chemicals for the rubber industry, and Skydrol aviation hydraulic fluid.
Solutia operates in 50 locations outside of the United States and derives 75% of its sales outside of the United States.
Solutia Beats by 138.89% on the Fourth Quarter
On Jan 27, Solutia reported fourth quarter results which surprised on the Zacks Consensus by 25 cents. Earnings per share were 43 cents compared to the Zacks Consensus of 18 cents.
Sales rose 10% to $470 million from $429 million compared to a year ago as the economic outlook improved as the year progressed. The fourth quarter saw the highest sales levels of the year. However, for the full year, sales still fell 21% year over year.
Sales were higher in all three of the companies main segments. Saflex sales rose 14%, CPFilms gained 10% and Technical Specialties jumped 7%.
Outlook for 2010
Solutia is expecting revenue growth of 5% to 10% in 2010 as the global recovery begins to take hold. It intends to use its broad geographic revenue base and diverse end markets to drive top line growth during the year.
Zacks Consensus Estimates Rise
Analysts liked what they heard in January as the Zacks Consensus for the first quarter and 2010 have been rising.
The first quarter Zacks Consensus Estimate is up 4 cents to 20 cents per share in the last 30 days.
For 2010, 4 estimates have moved higher in the last month as the Zacks Consensus rose 20% to $1.13 from 94 cents per share.
Solutia is scheduled to report first quarter results on May 5.
Value Fundamentals
Solutia is a Zacks #1 Rank (strong buy) stock. It has a price-to-book ratio of 2.81. Solutia also has a stellar 1-year return on equity (ROE) of 21.68% which is well above the industry average of 14.57%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.