Kronos Worldwide Up 114% In A Year: What's Behind The Rally?

Shares Kronos Worldwide, Inc. (NYSE:KRO) have shot up around 114% over a year. The chemical maker has also significantly outperformed its industry’s gain of roughly 28% over the same time frame.

Kronos Worldwide has a market cap of roughly $3.2 billion and average volume of shares traded in the last three months is around 472.8K. The company has expected long-term earnings per share growth of around 5%.

Let’s take a look into the factors that are driving this Zacks Rank #2 (Buy) stock.

Driving Factors

Upbeat outlook has contributed to the rally in Kronos Worldwide’s shares. The company expects its production volumes to be higher for full-year 2017 on a year-over-year basis as production rates for 2017 will be favorably impacted by the implementation of some productivity-enhancing improvement projects at certain facilities. Also, the company anticipates increased sales volume for 2017 compared to 2016.

The company also envisions income from operations for 2017 will be higher on a year-over-year basis, mainly due to an expected increase in average selling prices and the favorable impact of anticipated higher production and sales volumes in 2017.

The company witnessed a significant rise in profits in the last reported quarter on the back of higher average selling prices and increased sales and production volumes. It also saw strong sales volumes during the first nine months of 2017.

Kronos Worldwide is witnessing strong demand for titanium dioxide (TiO2) products across most segments. The company is also gaining from higher pricing. It saw average selling prices increasing 21% in the first nine months of 2017.

Annual estimates for Kronos Worldwide have also moved north over the past three months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2017 has increased by around 8% to $1.63 per share. The Zacks Consensus Estimate for 2018 has also moved up roughly 26% over the same timeframe to $2.30.

The Zacks Consensus Estimate for earnings for 2017 reflects an expected year-over-year growth of a staggering 425.8%. Moreover, earnings are expected to register a 41.1% growth in 2018.

Other Stocks to Consider

Other top-ranked companies in the basic materials space include Huntsman Corporation (NYSE:HUN) , Koppers Holdings Inc. (NYSE:KOP) and Air Products and Chemicals, Inc. (NYSE:APD) . While Huntsman sports a Zacks Rank #1 (Strong Buy), both Koppers and Air Products carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman has an expected long-term earnings growth of 8%. The stock has gained around 72% over a year.

Koppers has an expected long-term earnings growth of 18%. The stock has gained around 21% over a year.

Air Products has an expected long-term earnings growth of 14.1%. Its shares are up roughly 17% over a year.

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