HUN Stock Forecast: Expansion of Emerging Markets and Upgrading of Sustainable Development

Yuxiao YangThis HUN Stock Forecast article was written by Yuxiao Yang – Financial Analyst at I Know First.

Highlights:

  • In the third quarter of 2021, Huntsman reported revenue of $2285 million at the end of October, up 51.32% from the same period last year
  • Huntsman seizes more market shares with the expansion of emerging markets
  • Huntsman’s continuous exploration and investment in the field of sustainable development innovation will bring it great development potential and increase its sustainable income
(Source: commons.wikimedia.org)

Overview of Huntsman

Huntsman (NYSE: HUN) is an American-based chemical industry company. Headquartered in the Woodlands, Texas. The company produces specialty chemicals for use in a variety of consumer and industrial end markets, including aerospace, automotive and transportation, construction and construction, energy, and textiles and footwear.

Jon M. Huntsman founded Huntsman Chemical Corporation in Salt Lake City in 1982. Huntsman Container Corporation created the “clamshell” containers used by McDonald’s and other fast-food companies. For 50 years, Huntsman has operated more than 70 manufacturing, R&D, and operations facilities in approximately 30 countries and employs approximately 9,000 people. Huntsman consists of four divisions, Polyurethane, Advanced Materials, Performance Products, and Textile Effects.

(Source: csimarket.com)

Expanding Financial Performance: Success in Emerge Market

In the third quarter, Huntsman reported revenue of $2285 million at the end of October, up 51.32% from the same period last year, with earnings per diluted share up nearly three times from 0.22 to 0.94. Most businesses benefited from pent-up demand and continued price increases as the global economy continued to recover and demand increased. This has led to a significant increase in Huntsman’s revenue this year.

Among them, Huntsman’s overseas joint venture plants are a strong factor in the company’s overall revenue. Increased earnings from the Polyurethane Division’s PO/MTBE joint venture in China and rapidly growing demand from the Textile Effects Division in North Asia and the Americas contributed to the overall revenue growth. Huntsman’s strategy of seeking more cooperation opportunities and business expansion by taking advantage of the development opportunities in emerging markets will enable Huntsman’s seize more market shares with the expansion of emerging markets.

At the end of October, Huntsman completed its joint venture KPX Huntsman Automotive Polyurethane CO., LTD with KPX Chemical, a leading polyols producer in South Korea. (KHPUA). Creates innovative polyurethane system solutions to Korean automotive manufacturers through KPX Chemical’s Specialty polyurethane manufacturing facility. This partnership is strategically important for Huntsman and will support the company’s growth in the custom polyurethanes field.

ESG Solution and Exploration in New Technology

Huntsman Advanced Materials advanced products have been widely used in the transportation industry to build aircraft and produce lighter and more fuel-efficient vehicles. In 2020, The Textile Effects Mahachai factory in Thailand implemented an efficient cyclone separator on one of its spray dryers to significantly reduce production times; A technology developed by Huntsman in collaboration with Pursell Agri-Tech has won the prestigious 2021 Polyurethane Innovation Award from the American Chemical Council (ACC) Polyurethane Industry Center (CPI), which will help increase production and help control environmental pollution. In addition, a specialty amine plant designed to improve semiconductor manufacturing performance will be expanded in 2023.

Huntsman’s continuous exploration and investment in the field of sustainable development innovation will bring it great development potential and increase its sustainable income. Investors can expect Huntsman to win stable financial income with great development space in the future.

HUN’s Major Financial Metrics: Compare with Industry

Now let’s take a look at some of the fundamental indicators of the company that will help us understand its current position in the market and industry. The key profitability indicators of Huntsman look much better than competitors in the Chemicals industry and this is a serious positive factor for the company’s stocks.

Data source: gurufocus.com
(Figure 1 – HUN vs Chemical Industry in TTM)

According to GuruFocus, HUN’s ROE of 22.21% is higher than 84.1% of companies in the Chemical industry. HUN’s ROA of 9.4% is higher than 71.65% of companies in the industry. This can exhibit the company’s excellent profit generation ability. Moreover, the company actively distributes money to shareholders by Dividend and Share Buyback. HUN’s Dividend Payout Ratio of 0.19 and 3-Year Average Share Buyback of 2.9 are better than 65.28% and 96.8% of companies in the industry.

HUN looks interesting in terms of Piotroski F-Score and Altman Z-Score. Piotroski F-score is a number between 0 and 9 that is used to assess the soundness of a company’s financial position. A score of 7 may indicate that the company’s stock is undervalued and can be interpreted by investors as a good signal to buy the stock. The Altman Z-score is the result of a credit test that measures the likelihood of a publicly owned manufacturing company going bankrupt. It is also at a good level for HUN

Data source: gurufocus.com

Furthermore, HUN’s current P/E ratio of 9.15, and Shiller P/E ratio of 15.98 appear to be undervalued against its peers. Moreover, given the company’s technology leadership, its solid financial performance, and other factors we discussed, these price ratios can also represent and be in line with the company’s potential and further growth.

*Data source: gurufocus.com
(Figure 2: Price Earning Ratios of Comparable Companies)

In addition, Figure 3 displays the dynamic of HUN’s P/E ratios with an average value of 13.15 for the period from March 2014 to December 17, 2021.

*Data source: macrotrends.com
(Figure 3: The Historical Dynamic of HUN’s P/E Ratio for the period from March 2014 to December 17, 2021 )

Conclusion

In a nutshell, HUN is one of the most efficient companies in the Chemical industry that looks undervalued relative to competitors. Currently, HUN benefits from pent-up demand and continued price increases as the global economy continued to recover and demand increases. I suppose that Huntsman’s continuous exploration and investment in the field of sustainable development innovation will bring it great development potential and increase its sustainable income. Investors can expect Huntsman to win stable financial income with great development space in the future.

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the HUN stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success With HUN Stock Forecast

I Know First has been bullish on the HUN stock forecast in the past. On September 19th, 2021 the I Know First algorithm issued a forecast for HUN stock price and recommended HUN as one of the best chemical stocks to buy. The AI-driven HUN stock prediction was successful on a 3-months time horizon resulting in more than 21.68%.

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Please note-for trading decisions use the most recent forecast.