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LyondellBasell (LYB) Up 22% in 6 Months: What's Driving It?
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Shares of chemicals giant, LyondellBasell Industries N.V. (LYB - Free Report) have rallied around 22% over the last six months. The company has also outperformed its industry's gain of roughly 14% over the same time frame.
LyondellBasell has a market cap of roughly $43.6 billion and average volume of shares traded in the last three months is around 2,095.7K. The company has expected long-term earnings per share growth of around 9%.
Let's take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
Driving Factors
Forecast-topping earnings performance in the last reported quarter, upbeat outlook and strong prospects stemming from the planned acquisition of A. Schulman, Inc. have contributed to the rally in LyondellBasell's shares.
LyondellBasell’s profits surged more than two-fold year over year to $1.9 billion or $4.80 per share in the fourth quarter of 2017. The bottom line was boosted by a non-cash benefit from the U.S. tax reform of $2.07 per share.
Adjusted earnings of $2.73 per share for the quarter outstripped the Zacks Consensus Estimate of $2.52. Revenues went up roughly 18% year over year to $9,135 million in the quarter, beating the Zacks Consensus Estimate of $8,785 million. The company witnessed higher sales across its segments in the quarter.
LyondellBasell noted that strong global demand and delays in capacity additions across the industry have led to improved outlook for 2018. The company intends to realize the benefits of strong operating rates across its global portfolio of assets and continue the upward trajectory in profitability for the Houston refinery. The company expects strong contributions from its refinery in 2018 driven by the efforts to improve its reliability and performance.
LyondellBasell is executing its expansion projects to leverage the U.S. natural gas liquids advantage. The company’s expansion initiatives are expected to boost capacity and add to its earnings.
The company is constructing a high-density polyethylene (HDPE) plant on the U.S. Gulf Coast that will employ its proprietary Hyperzone PE technology. The facility is expected to have an annual capacity of 1.1 billion pounds. LyondellBasell is also constructing a world scale plant on the U.S. Gulf Coast for producing propylene oxide (PO) and tertiary butyl alcohol (TBA), which will have an annual capacity of 1 billion pounds of PO and 2.2 billion pounds of TBA and its derivatives.
A major part of the company’s growth investment for 2018 will be allocated to these projects. LyondellBasell expects capital spending of roughly $2.4 billion for 2018 with roughly 55% is targeted toward profit generating growth.
LyondellBasell also recently agreed to buy A. Schulman in a deal worth $2.25 billion, a move that will create a premier global provider of advanced polymer solutions with extensive geographic reach, leading technologies and a diverse product portfolio. A. Schulman is a leading supplier of high-performance plastic compounds, composites and powders. The acquisition is expected to complete in second-half 2018.
The buyout doubles the size of LyondellBasell's existing compounding business. It also creates a platform for future growth with reach into additional high-growth markets such as packaging and consumer products, electronics and appliances, building and construction, and agriculture. The acquisition will enable the company to offer a comprehensive range of innovative solutions to its customers.
LyondellBasell expects to capture $150 million in run-rate cost synergies within two years. The buyout is also expected to be accretive to earnings within the first full year following its closure.
LyondellBasell Industries N.V. Price and Consensus
Methanex has an expected long-term earnings growth rate of 15%. Its shares have gained roughly 27% over the past six months.
Mosaic has an expected long-term earnings growth rate of 9.5%. Its shares have rallied around 40% over the past six months.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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LyondellBasell (LYB) Up 22% in 6 Months: What's Driving It?
Shares of chemicals giant, LyondellBasell Industries N.V. (LYB - Free Report) have rallied around 22% over the last six months. The company has also outperformed its industry's gain of roughly 14% over the same time frame.
LyondellBasell has a market cap of roughly $43.6 billion and average volume of shares traded in the last three months is around 2,095.7K. The company has expected long-term earnings per share growth of around 9%.
Let's take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
Driving Factors
Forecast-topping earnings performance in the last reported quarter, upbeat outlook and strong prospects stemming from the planned acquisition of A. Schulman, Inc. have contributed to the rally in LyondellBasell's shares.
LyondellBasell’s profits surged more than two-fold year over year to $1.9 billion or $4.80 per share in the fourth quarter of 2017. The bottom line was boosted by a non-cash benefit from the U.S. tax reform of $2.07 per share.
Adjusted earnings of $2.73 per share for the quarter outstripped the Zacks Consensus Estimate of $2.52. Revenues went up roughly 18% year over year to $9,135 million in the quarter, beating the Zacks Consensus Estimate of $8,785 million. The company witnessed higher sales across its segments in the quarter.
LyondellBasell noted that strong global demand and delays in capacity additions across the industry have led to improved outlook for 2018. The company intends to realize the benefits of strong operating rates across its global portfolio of assets and continue the upward trajectory in profitability for the Houston refinery. The company expects strong contributions from its refinery in 2018 driven by the efforts to improve its reliability and performance.
LyondellBasell is executing its expansion projects to leverage the U.S. natural gas liquids advantage. The company’s expansion initiatives are expected to boost capacity and add to its earnings.
The company is constructing a high-density polyethylene (HDPE) plant on the U.S. Gulf Coast that will employ its proprietary Hyperzone PE technology. The facility is expected to have an annual capacity of 1.1 billion pounds. LyondellBasell is also constructing a world scale plant on the U.S. Gulf Coast for producing propylene oxide (PO) and tertiary butyl alcohol (TBA), which will have an annual capacity of 1 billion pounds of PO and 2.2 billion pounds of TBA and its derivatives.
A major part of the company’s growth investment for 2018 will be allocated to these projects. LyondellBasell expects capital spending of roughly $2.4 billion for 2018 with roughly 55% is targeted toward profit generating growth.
LyondellBasell also recently agreed to buy A. Schulman in a deal worth $2.25 billion, a move that will create a premier global provider of advanced polymer solutions with extensive geographic reach, leading technologies and a diverse product portfolio. A. Schulman is a leading supplier of high-performance plastic compounds, composites and powders. The acquisition is expected to complete in second-half 2018.
The buyout doubles the size of LyondellBasell's existing compounding business. It also creates a platform for future growth with reach into additional high-growth markets such as packaging and consumer products, electronics and appliances, building and construction, and agriculture. The acquisition will enable the company to offer a comprehensive range of innovative solutions to its customers.
LyondellBasell expects to capture $150 million in run-rate cost synergies within two years. The buyout is also expected to be accretive to earnings within the first full year following its closure.
LyondellBasell Industries N.V. Price and Consensus
LyondellBasell Industries N.V. Price and Consensus | LyondellBasell Industries N.V. Quote
Other Stocks to Consider
Other companies worth considering in the basic materials space include Methanex Corporation (MEOH - Free Report) and The Mosaic Company (MOS - Free Report) , both sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Methanex has an expected long-term earnings growth rate of 15%. Its shares have gained roughly 27% over the past six months.
Mosaic has an expected long-term earnings growth rate of 9.5%. Its shares have rallied around 40% over the past six months.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>