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Zacks Industry Outlook Highlights: Eastman Chemical, Celanese and Air Products and Chemicals
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For Immediate Release
Chicago, IL – November 9, 2017 – Today, Zacks Equity Research discusses the Chemicals, including Eastman Chemical Company (EMN - Free Report) , Celanese Corporation (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) .
The chemical industry is back on the growth path after being roiled by the global economic crisis. The highly cyclical industry has enjoyed a positive run this year, helped by an upswing in the world economy and continued strength across major end-use markets such as Construction, Automotive and Electronics.
The Zacks Chemicals Diversified industry has outperformed the broader market year to date. The industry returned around 26% over the same time frame, while the S&P 500 index advanced roughly 16.1%.
The September quarter earnings season is on its last leg, with most of the companies in the chemical space having already unveiled their quarterly numbers. We note that a number of companies in the space including prominent names such as Eastman Chemical Company (EMN - Free Report) , Celanese Corporation (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) , produced earnings beats in the quarter. The outperformance was supported by solid demand across major end-markets as well as strategic measures including productivity improvement, pricing actions, portfolio restructuring and earnings-accretive acquisitions.
Chemical companies continue to switch their focus on attractive growth markets in an effort to cut their exposure on other businesses that are grappling with weak demand. Moreover, they remain actively focused on mergers and acquisitions to diversify their business, enhance operational scale and perk up growth.
Cost-cutting measures and productivity improvement actions by chemical companies are expected to continue to yield industry-wide margin improvements. A number of chemical makers are also taking appropriate pricing actions in the wake of a sharp rise in raw material costs.
Chemical makers also continue to see strong demand from construction and automotive sectors -- major chemical end-use markets. The automotive sector continues its good run, supported by an improving job market, rising personal income, improved consumer confidence and attractive financing options.
A recovery across housing and commercial construction markets has been another tailwind for the chemical industry. The underlying trends in the housing space remain healthy, backed by steady buyer demand, low mortgage rates, rising rent costs and easy loan availability.
Another positive is a recovery in demand in the energy space -- a key chemical end-market that had been out of favor for a while. The recovery has been driven by the recent rebound in crude oil prices, supported by the Saudi-led OPEC cartel’s compliance with its production cut agreement, declining U.S. oil stockpiles as well as the prospects of extended oil production cuts by OPEC and other major world producers.
Notwithstanding a few headwinds including the lingering impacts of the devastating Hurricane Harvey, the chemical industry’s momentum is expected to continue through the balance of 2017, supported by continued strength across key end-use markets, an improving global economy and significant shale-linked capital investment.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights: Eastman Chemical, Celanese and Air Products and Chemicals
For Immediate Release
Chicago, IL – November 9, 2017 – Today, Zacks Equity Research discusses the Chemicals, including Eastman Chemical Company (EMN - Free Report) , Celanese Corporation (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) .
Industry: Chemicals, Part 1
Link: https://www.zacks.com/commentary/136267/chemicals-industry-stock-outlook---november-2017
The chemical industry is back on the growth path after being roiled by the global economic crisis. The highly cyclical industry has enjoyed a positive run this year, helped by an upswing in the world economy and continued strength across major end-use markets such as Construction, Automotive and Electronics.
The Zacks Chemicals Diversified industry has outperformed the broader market year to date. The industry returned around 26% over the same time frame, while the S&P 500 index advanced roughly 16.1%.
The September quarter earnings season is on its last leg, with most of the companies in the chemical space having already unveiled their quarterly numbers. We note that a number of companies in the space including prominent names such as Eastman Chemical Company (EMN - Free Report) , Celanese Corporation (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) , produced earnings beats in the quarter. The outperformance was supported by solid demand across major end-markets as well as strategic measures including productivity improvement, pricing actions, portfolio restructuring and earnings-accretive acquisitions.
Chemical companies continue to switch their focus on attractive growth markets in an effort to cut their exposure on other businesses that are grappling with weak demand. Moreover, they remain actively focused on mergers and acquisitions to diversify their business, enhance operational scale and perk up growth.
Cost-cutting measures and productivity improvement actions by chemical companies are expected to continue to yield industry-wide margin improvements. A number of chemical makers are also taking appropriate pricing actions in the wake of a sharp rise in raw material costs.
Chemical makers also continue to see strong demand from construction and automotive sectors -- major chemical end-use markets. The automotive sector continues its good run, supported by an improving job market, rising personal income, improved consumer confidence and attractive financing options.
A recovery across housing and commercial construction markets has been another tailwind for the chemical industry. The underlying trends in the housing space remain healthy, backed by steady buyer demand, low mortgage rates, rising rent costs and easy loan availability.
Another positive is a recovery in demand in the energy space -- a key chemical end-market that had been out of favor for a while. The recovery has been driven by the recent rebound in crude oil prices, supported by the Saudi-led OPEC cartel’s compliance with its production cut agreement, declining U.S. oil stockpiles as well as the prospects of extended oil production cuts by OPEC and other major world producers.
Notwithstanding a few headwinds including the lingering impacts of the devastating Hurricane Harvey, the chemical industry’s momentum is expected to continue through the balance of 2017, supported by continued strength across key end-use markets, an improving global economy and significant shale-linked capital investment.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.