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AdvanSix Inc.’s (ASIX - Free Report) stock looks attractive from a valuation standpoint. ASIX is currently trading at a forward price/earnings of 8.34X, a roughly 65.3% discount when stacked up with the industry average of 24.04X. It also has a Value Score of A.
ASIX stock is trading at a roughly 10% discount to its 52-week high of $31.62, reached on Sept. 19, 2023.
AdvanSix’s cheap valuation should lure investors seeking value. But is the time right to buy ASIX’s shares based on its attractive valuation? Let’s delve deeper.
Image Source: Zacks Investment Research
ASIX Stock Outperforms Industry and S&P 500
ASIX’s shares have rallied 22.4% in the past three months, outperforming the industry’s rise of 4% and the S&P 500’s increase of 2.6%. The rally appears to have been catalyzed by its better-than-expected earnings performance in the second quarter of 2024 and the company’s favorable second-half outlook. Its peers, BASF SE (BASFY - Free Report) and Eastman Chemical Company (EMN - Free Report) have gained 4% and 8.5%, respectively, while Nutrien Ltd. (NTR - Free Report) has lost 9.9% over the same period.
ASIX’s Stock Price Performance Vs Industry, S&P 500 & Peers
Image Source: Zacks Investment Research
ASIX to Gain on Increased Nylon Demand & Favorable Prices
AdvanSix, which produces nylon 6 resin, chemical intermediates and ammonium sulfate fertilizer, is benefiting from its differentiated product portfolio, exposure to diverse end markets and favorable demand and pricing. It is expected to gain from improved nylon demand conditions and the growth of its differentiated products. While the building and construction market is a weak link due to the elevated interest rate environment, nylon demand remains firm in engineered plastics and packaging applications. The favorable agricultural industry fundamentals also bode well for ammonium sulfate. The company is also currently operating at targeted utilization rates at its Frankford, PA, manufacturing site following an operational disruption in January 2024 that impacted phenol and acetone production.
ASIX saw higher sales for nylon and ammonium sulfate in the second quarter of 2024, supported by favorable supply and demand dynamics in North America. Favorable pricing trends, particularly for acetone, are also supporting its performance.
ASIX anticipates stronger ammonium sulfate pricing in the third quarter due to solid demand entering the fall fill season. The outlook for global acetone supply and demand remains balanced to tight. North American nylon industry spreads are expected to modestly improve through the year due to tighter regional supply and stable end-market demand. Improving nylon industry spreads and a tight global acetone supply and demand environment support its favorable outlook for the second half of 2024.
Sound Financial Health Bodes Well for AdvanSix Stock
AdvanSix has a healthy balance sheet and generates substantial cash flows, which allows it to drive shareholder value and fund growth initiatives. The company ended the second quarter of 2024 with cash and cash equivalents of $12.1 million and around $269 million available under the revolving credit facility. Operating cash flow climbed 43% year over year to $50.2 million while free cash flow increased 6% to $16.7 million. ASIX returned around $19 million to shareholders through dividends and repurchases during the first half of 2024.
ASIX offers a healthy dividend yield of 2.2% (above the S&P 500′s average dividend yield of roughly 2%) at the current stock price. It has a five-year annualized dividend growth rate of 44.3%. However, it has a high payout ratio of 237%, which raises questions about sustainability. A ratio below 60% is a good indicator that the dividend will be sustainable. The company's dividend is perceived to be safe and reliable, backed by strong cash flows and sound financial health.
Earnings estimates for ASIX have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2024 and 2025 have been revised upward over the same time frame.
Image Source: Zacks Investment Research
Bullish Technicals for ASIX Stock
Technical indicators for ASIX show bullish momentum. The stock broke out above its 200-day simple moving average (SMA) on July 17, 2024. It is also currently trading above the 50-day SMA. ASIX also reached a key technical milestone, with the 50-day SMA crossing above the 200-day SMA on Sept. 2, 2024, signaling an uptrend.
ASIX Shares Trade Above 50-day SMA
Image Source: Zacks Investment Research
Final Thoughts: Buy ASIX Shares
With solid financial health and bullish technicals, ASIX presents a compelling investment case. Its cheap valuation also offers an attractive entry point. Improving nylon demand fundamentals and favorable pricing, rising earnings estimates, and a healthy dividend yield are other positives. We recommend that investors add this Zacks Rank #1 (Strong Buy) stock as it has upbeat prospects.
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AdvanSix Stock Dirt Cheap: Should You Buy Now?
AdvanSix Inc.’s (ASIX - Free Report) stock looks attractive from a valuation standpoint. ASIX is currently trading at a forward price/earnings of 8.34X, a roughly 65.3% discount when stacked up with the industry average of 24.04X. It also has a Value Score of A.
ASIX stock is trading at a roughly 10% discount to its 52-week high of $31.62, reached on Sept. 19, 2023.
AdvanSix’s cheap valuation should lure investors seeking value. But is the time right to buy ASIX’s shares based on its attractive valuation? Let’s delve deeper.
ASIX Stock Outperforms Industry and S&P 500
ASIX’s shares have rallied 22.4% in the past three months, outperforming the industry’s rise of 4% and the S&P 500’s increase of 2.6%. The rally appears to have been catalyzed by its better-than-expected earnings performance in the second quarter of 2024 and the company’s favorable second-half outlook. Its peers, BASF SE (BASFY - Free Report) and Eastman Chemical Company (EMN - Free Report) have gained 4% and 8.5%, respectively, while Nutrien Ltd. (NTR - Free Report) has lost 9.9% over the same period.
ASIX’s Stock Price Performance Vs Industry, S&P 500 & Peers
ASIX to Gain on Increased Nylon Demand & Favorable Prices
AdvanSix, which produces nylon 6 resin, chemical intermediates and ammonium sulfate fertilizer, is benefiting from its differentiated product portfolio, exposure to diverse end markets and favorable demand and pricing. It is expected to gain from improved nylon demand conditions and the growth of its differentiated products. While the building and construction market is a weak link due to the elevated interest rate environment, nylon demand remains firm in engineered plastics and packaging applications. The favorable agricultural industry fundamentals also bode well for ammonium sulfate. The company is also currently operating at targeted utilization rates at its Frankford, PA, manufacturing site following an operational disruption in January 2024 that impacted phenol and acetone production.
ASIX saw higher sales for nylon and ammonium sulfate in the second quarter of 2024, supported by favorable supply and demand dynamics in North America. Favorable pricing trends, particularly for acetone, are also supporting its performance.
ASIX anticipates stronger ammonium sulfate pricing in the third quarter due to solid demand entering the fall fill season. The outlook for global acetone supply and demand remains balanced to tight. North American nylon industry spreads are expected to modestly improve through the year due to tighter regional supply and stable end-market demand. Improving nylon industry spreads and a tight global acetone supply and demand environment support its favorable outlook for the second half of 2024.
Sound Financial Health Bodes Well for AdvanSix Stock
AdvanSix has a healthy balance sheet and generates substantial cash flows, which allows it to drive shareholder value and fund growth initiatives. The company ended the second quarter of 2024 with cash and cash equivalents of $12.1 million and around $269 million available under the revolving credit facility. Operating cash flow climbed 43% year over year to $50.2 million while free cash flow increased 6% to $16.7 million. ASIX returned around $19 million to shareholders through dividends and repurchases during the first half of 2024.
ASIX offers a healthy dividend yield of 2.2% (above the S&P 500′s average dividend yield of roughly 2%) at the current stock price. It has a five-year annualized dividend growth rate of 44.3%. However, it has a high payout ratio of 237%, which raises questions about sustainability. A ratio below 60% is a good indicator that the dividend will be sustainable. The company's dividend is perceived to be safe and reliable, backed by strong cash flows and sound financial health.
ASIX’s Rising Earnings Estimates Reflect Positive Sentiment
Earnings estimates for ASIX have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2024 and 2025 have been revised upward over the same time frame.
Bullish Technicals for ASIX Stock
Technical indicators for ASIX show bullish momentum. The stock broke out above its 200-day simple moving average (SMA) on July 17, 2024. It is also currently trading above the 50-day SMA. ASIX also reached a key technical milestone, with the 50-day SMA crossing above the 200-day SMA on Sept. 2, 2024, signaling an uptrend.
ASIX Shares Trade Above 50-day SMA
Final Thoughts: Buy ASIX Shares
With solid financial health and bullish technicals, ASIX presents a compelling investment case. Its cheap valuation also offers an attractive entry point. Improving nylon demand fundamentals and favorable pricing, rising earnings estimates, and a healthy dividend yield are other positives. We recommend that investors add this Zacks Rank #1 (Strong Buy) stock as it has upbeat prospects.
You can see the complete list of today’s Zacks #1 Rank stocks here.