Zacks Investment Research upgraded Kronos Worldwide, Inc. (KRO) to a Zacks Rank #1 (Strong Buy) on Dec 10, 2014. Going by the Zacks model, companies sporting a Zacks Rank #1 have strong chances of performing better than the broader market.
Why the Upgrade?
Kronos Worldwide’s better-than-expected results in third-quarter 2014 have increased investors’ optimism regarding its growth prospects. The company reported earnings of 28 cents per share, way above the loss of 26 cents per share recorded in the year-ago quarter. Also, the bottom-line surpassed the Zacks Consensus Estimate of 21 cents.
Revenues inched down 1% year over year due primarily to a 6% negative impact from TiO2 product pricing, offset by a 4% gain in TiO2 sales volume and 1% gain from foreign currency translation. The top-line decline was more than offset by a 14.2% fall in cost of sales. Gross margin increased to 23.1% versus 11.3% in the year-ago quarter.
Following the third-quarter results, the earnings estimates for Kronos Worldwide has been revised upward. Over the last 60 days, the Zacks Consensus Estimate climbed 4.2% to 75 cents for 2014. The company has an Earnings ESP of +6.67% for 2014 and +0.96% for 2015. Also, the company’s earnings are anticipated to grow by 5% over the next 5 years.
Other Stocks to Consider
Kronos Worldwide, currently, has a $1.4 billion market capitalization. Some better-ranked stocks in the chemical industry include Innospec Inc. (IOSP), Valhi, Inc. (VHI) and Celanese Corporation (CE). While both Innospec and Valhi sport a Zacks Rank #1 (Strong Buy), Celanese Corporation carries a Zacks Rank #2 (Buy).
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