Zacks Investment Research downgraded Koppers Holdings Inc. (KOP) to a Zacks Rank #5 (Strong Sell) on Jan 6, 2015. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.
Why the Downgrade?
Koppers Holdings’ third-quarter 2014 results did not fare better than the previous three quarters, with a negative average earnings surprise of 28.4%. Since then, market sentiments have been weak for the stock, as evident from a 32.5% drop in the company’s share price as well as downward revisions in earnings estimates.
Adjusted earnings of 60 cents per share were down 33.3% year over year and also lagged the Zacks Consensus Estimate of 65 cents by 7.7%. Revenues grew 11.4% year over year, offset by a 14% hike in costs of sales and 74.9% jump in selling, general and administrative expenses. While operating profit declined 55.8%, margin fell 600 basis points, both on a year-over-year basis.
Lackluster performance has made investors dubious about Koppers Holdings’ performance in the years ahead. The company has an Earnings ESP of -16.67% for 2015. Also, over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 4.6% to $1.67 for 2014 and 18.2% to $2.52 for 2015.
Other Stocks to Consider
Koppers Holdings currently has a $516 million market capitalization. Some better-ranked stocks in the chemical-diversified industry include Air Products & Chemicals Inc. (APD), Kronos Worldwide, Inc. (KRO) and PPG Industries Inc. (PPG). All these stocks carry a Zacks Rank #2 (Buy).
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