• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Research
    • Markets & Technologies
    • Raw Materials
    • Top Companies
    • Directories
    • Jobs
    • Events
    • Microsites
    • More
  • Magazine
  • News
  • Research
  • Markets & Technologies
  • Raw Materials
  • Top Companies
  • Directories
  • Jobs
  • Events
  • Microsites
  • Current / Back Issues
    Features
    Business Corner
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Subscribe Now
    Advertise Now
    World Reports
    eBook
    Top Features
    Powder Coatings Market

    Performance Enhancing Additives

    The Role Of Kilowatt Hours In Measuring Mill Performance

    The 2023 Marine Coatings Market

    PPG: Treated Silicas Enable Tire Manufacturing Energy Savings and Reduced Complexity
    Breaking News
    Online Exclusives
    Distributor News
    Financial News
    Paint & Coatings Manufacturer News
    People In the News
    Price Increases
    Product News
    Raw Materials & Equipment
    Video Bites
    Suppliers News
    Live From Shows
    Top News
    PPG, Flō-Optics Announce Exclusive Supplier Agreement for First Digitally Applied Optical Coatings

    BASF Donates $5,000 to High School STEAM Education Programs in Chattanooga Area

    Coating Additives Market Worth $10.5B by 2028: MarketsandMarkets

    California Sports Surfaces Celebrates 70 Years

    ROSS Offers Cost-Effective, Expertly Reconditioned Equipment
    Top Companies report
    Market Research
    White Papers / Tech Papers
    Technical Papers
    Product Spec Sheets
    World Reports
    Adhesives and Sealants
    Aerospace Coatings
    Architectural Coatings
    Automotive Coatings
    Automotive Refinish
    Business Operation
    Color Trends & Forecast
    Construction Chemicals
    Corrosion Control
    Industrial Coatings
    Laboratory Equipment
    Marine Coatings
    Market Trends & Forecast
    Powder Coatings
    Production Equipment
    Radcure Coatings
    Special Purpose Coatings
    Wood Coatings
    "Green" Coatings

    PPG, Flō-Optics Announce Exclusive Supplier Agreement for First Digitally Applied Optical Coatings

    California Sports Surfaces Celebrates 70 Years

    ROSS Offers Cost-Effective, Expertly Reconditioned Equipment

    Selektope Keeps Global Mercy’s Hull Barnacle-Free

    PPG Introduces High-Performance UF Membranes and Filter Elements
    Additives
    Binders
    Pigments
    Solvents

    Coating Additives Market Worth $10.5B by 2028: MarketsandMarkets

    Micro Powders Showcases Natural, PTFE Alternative Additives at 2023 WCS

    OQ Chemicals Announces Price Increases for Oxo Intermediates

    BASF Broadens Monomers Portfolio, Launches Bio-based 2-Octyl Acrylate

    “MyCarbonFootprint”: BASF Launches Dashboard for Sustainable Procurement
    Company Capabilities
    Buyers Guide
    Distributor Guide
    Add New Company
    International Buyers Guide Companies
    Clariant Additives

    Shepherd Color Company, The

    EPS

    Siltech Corporation

    Active Minerals
    Industry Events
    Webinars
    Live From Show Event
    Top Events
    The Gulf Coatings Show

    Western Coatings Symposium 2023

    Pacific Coatings Show

    CHINACOAT 2023

    ABRAFATI 2023
    Companies
    White Papers/Tech Papers
    Product Spec Sheets
    Equipment
    Literature/Brochures
    Videos
    International Buyers Guide Companies
    Clariant Additives

    Shepherd Color Company, The

    EPS

    Siltech Corporation

    Active Minerals
    • Magazine
      • Current / Back Issues
      • Features
      • Editorial
      • Business Corner
      • Digital Edition
      • eNewsletter Archive
      • Editorial Guidelines
      • Subscribe Now
      • Advertise Now
    • Breaking News
    • Directories
      • Buyers Guide
      • Distributor Guide
      • Corporate Capabilities
      • Trade Associations
      • Add Your Company
    • Markets & Technologies
      • Adhesives and Sealants
      • Aerospace Coatings
      • Architectural Coatings
      • Automotive Coatings
      • Automotive Refinish
      • Business Operation
      • Color Trends & Forecast
      • Construction Chemicals
      • Corrosion Control
      • Industrial Coatings
      • Laboratory Equipment
      • Marine Coatings
      • Market Trends & Forecast
      • Powder Coatings
      • Production Equipment
      • Radcure Coatings
      • Special Purpose Coatings
      • Wood Coatings
      • "Green" Coatings
    • Raw Materials
      • Additives
      • Binders
      • Pigments
      • Solvents
    • World Reports
      • Africa Report
      • China Report
      • India/Asia Pacific Report
      • Europe Report
      • Latin America Report
      • Market Research
      • Russian Report
    • Top Companies
    • Online Exclusives
    • Glossary
    • Slideshows
    • Experts Opinions
    • Blog
    • eBook
    • Infographics
    • Videos
    • Podcasts
    • Whitepapers
    • Jobs
    • Microsites
      • Companies
      • White Papers/Tech Papers
      • Product Spec Sheets
      • Equipment
      • Literature/Brochures
      • Videos
    • Events
      • Industry Events
      • Live From Show Event
      • Webinars
    • About Us
      • About Us
      • Contact Us
      • Advertise With Us
      • Privacy Policy
      • Terms of Use
    Expert's Opinion

    W.R. Grace and Co., DowDuPont Inc.– What's Next After Solid 3Q17 Results?

    ...

    W.R. Grace and Co., DowDuPont Inc.– What
    10.30.17
    W.R. Grace and Co. (GRA: Buy, $86 PT) 
    Fundamentals Humming; Is M&A Next?

    • We exit 3Q feeling even better about risk-reward. We’d characterize 3Q as a good, solid quarter all around. While our estimate of Harvey-related headwinds was close to the mark ($7mn in 2017 vs. Grace’s expectation of $6mn), it turns out that underlying operations were tracking better than anticipated in FCC, polymerization catalysts and Materials Technologies. This may explain why Grace did not issue a pre-release as several other chemical companies have done. Through today’s news are also encouraged by pricing efforts in FCC and have gained conviction that Grace’s high-margin licensing business will continue to rebound from a cyclical trough in 2016. In this context, we continue to view GRA shares as inexpensive vs. peers in the chemicals sector and would expect shares to outperform in the coming year, irrespective of the well-chronicled, Takreer-related headwind in FCC of $25mn or $0.25 per share.  What is more, we continue to see potential to create value via strategic actions as a buyer, or a seller, or perhaps both in succession. Indeed, management described the company’s M&A pipeline as “very active” and signaled comfort with a hypothetical increase in financial leverage to 4x EBITDA, which is the “ceiling” we used in our recent note entitled The ART of the Deal (click here). As a result, we continue to believe that Grace will pursue assets to be divested by CB&I, either independently or through ART, Grace’s hydroprocessing catalyst (HPC) JV with Chevron (please see appendix for our updated accretion analysis).
    • Our top 10 takeaways: (1) adjusted EPS of $0.90 exceeded our $0.81E and consensus of $0.83E; in light of Hurricane Harvey, we had trimmed by $0.07, whereas Grace quantified the actual earnings hit at $0.04 in 3Q plus another $0.02 in 4Q; all Harvey-related hits are in Catalysts; (2) sales grew 6% in 3Q to $430mn, which likewise exceeded our forecast; (3) Grace posted operating upside in both Catalysts and Materials Technologies, while equity earnings (ART JV) came in ~$2mn less than we anticipated; (4) insurance proceeds of $12mn make $25mn YTD, so insurance has been “maxed out” entering 4Q17; (5) Grace announced a new FCC catalyst price increase of +3-9% effective...
    • Changes to our model: We raise our 2017 and 2018 EPS estimates by $0.10 to $3.40 and $3.70, respectively. Changes reflect higher projected operating earnings in Catalyst Technologies and Materials Technologies as well as a slightly lower tax rate and share count, partially offset by higher corporate costs and somewhat weaker than expected 3Q results at Grace’s ART JV with Chevron. We have also reduced our 2017 capex forecast to $140mn from $155mn.
    • We rate GRA shares Buy and raise our price target by $4 to $86. Our revised target suggests total upside potential of 16%, including a dividend yield of 1.1%. GRA shares now trade at a 2018 P/E multiple of 20.3x, unadjusted for the $6/share in present value of tax assets, and 18.7x our 2018 EPS inclusive of tax assets.  This tax-adjusted value represents a discount of 3.2x or 14% vs. the average specialty chemical company, and only a 1.3 or 7% premium to the sector median 2018 P/E multiple of 17.4x. Our valuation of GRA is based on an average of two methodologies: DCF analysis and a relative P/E framework. Our DCF analysis suggests a warranted stock price of $87. Using our relative P/E framework wherein we apply a 15% premium to the S&P500 multiple, we calculate warranted value of $84 per GRA share inclusive of tax asset value.
    (See full report for details)
    ----
    DowDuPont Inc. (DWDP: Buy, $79 PT) 
    3Q Flash: EPS and Sales Beat Street

    • DWDP pre-released 3Q earnings upside. In somewhat unexpected fashion, DWDP pre-released earnings concurrent with this morning’s unscheduled filing of pro forma deal-related financials. 3Q EPS came in at $0.47A on an apples-apples basis with our $0.40E and consensus of the same. Going forward, we understand that DWDP intends to report EPS on a cash basis, i.e. adding back the full effect of deal-related amortization expense. On this basis, DWDP would have reported $0.55 per share. Likewise, sales of $18.3bn exceeded our forecast of $17.4bn and the Street’s $17.6bn. We look forward to learning additional details when DWDP reports earnings on 2 November.
    • Three drivers propelled upside despite three headwinds. Upside drivers include (1) robust consumer-led demand; (2) pricing gains; and (3) higher equity earnings, which more than offset headwinds in the form of (A) higher feedstock costs; (B) lower corn area and a delayed start to the summer season in Brazil; and (C) and the unfavorable impact of the hurricanes.
    • DWDP remains our top pick with a price target of $79. Our target suggests total upside potential of 14%, inclusive of the dividend which is yet to be determined by the company’s new board of directors (Dow’s old dividend was $1.84 per annum, which would imply a yield of 2.6%). Given a pending break-up into three separate companies, we continue to assess the value of DWDP shares using a sum-of-the parts (SOTP) framework for the combined entity, DowDuPont, including synergies and underfunded pension liabilities. DWDP now trades at a 2018 P/E multiple of 17.8x, in line with the average of our 16 chemical companies under coverage. Likewise, DWDP trades for 9.8x our 2018 EBITDA vs. an average of 10.4x for the sector. We continue to believe these multiples are too low for a catalyst-rich stock with a forward looking 3-year EPS CAGR of 11%+, or a premium of 400bps vs. the average for the US chemicals sector.  
    (See full report for details)
    Related Searches
    • dowdupont
    • led
    • chemical
    • dow
    Suggested For You
    EPS EPS
    W. R. Grace & Co. W. R. Grace & Co.
    Nally, Novo Join PPG Board of Directors Nally, Novo Join PPG Board of Directors
    Grace Showcases its Latest Eco-Friendly and High-Performance Solutions at CHINACOAT 2020 Grace Showcases its Latest Eco-Friendly and High-Performance Solutions at CHINACOAT 2020
    SHW Analyst Comments on Disappointing 3Q17 Results, Trims Estimates SHW Analyst Comments on Disappointing 3Q17 Results, Trims Estimates
    PPG Industries (PPG) - Analyst Comments on Disappointing 3Q17 Margins/In-Line Results PPG Industries (PPG) - Analyst Comments on Disappointing 3Q17 Margins/In-Line Results
    Analyst Provides Keys to the Future After RPM Analyst Provides Keys to the Future After RPM's F1Q18 Results
    DowDuPont–Analyst Raises PT After Deep Dive Into Financial Model DowDuPont–Analyst Raises PT After Deep Dive Into Financial Model
    DowDuPont- Analyst Reaffirms Buy and $74 PT After Conference Call, Hurricane Harvey Update DowDuPont- Analyst Reaffirms Buy and $74 PT After Conference Call, Hurricane Harvey Update
    Analyst Finds Silver Lining After PPG Industries (PPG) 2Q17 Results Analyst Finds Silver Lining After PPG Industries (PPG) 2Q17 Results
    Analyst Looks at Dow/DuPont Merger, Unveils Integrated Financial Model Analyst Looks at Dow/DuPont Merger, Unveils Integrated Financial Model
    Analyst Provides Takeaways from Sherwin-Williams (SHW) 2Q17 Results Analyst Provides Takeaways from Sherwin-Williams (SHW) 2Q17 Results
    More Analyst Insight on Hurricane Harvey Impact on Chemical Stocks More Analyst Insight on Hurricane Harvey Impact on Chemical Stocks
    Analyst Looks at Soft 2Q17 Results from Sherwin-Williams Company Analyst Looks at Soft 2Q17 Results from Sherwin-Williams Company
    Axalta Coating Systems Ltd.: M&A Opportunity Set Expands Axalta Coating Systems Ltd.: M&A Opportunity Set Expands

    Related Buyers Guide Companies

    • Adhesives and Sealants
      EPS

      EPS

      ...
      Nancy Metzger, Marketing Support 09.21.22

    • W. R. Grace & Co.

      W. R. Grace & Co.

      ...
      James Bowler, Global Marketing Manager 11.18.21

    • Breaking News | People in the News
      Nally, Novo Join PPG Board of Directors

      Nally, Novo Join PPG Board of Directors

      Michael Nally is executive VP and chief marketing officer, Merck & Co., Inc.; Guillermo Novo is chairman and CEO, Ashland Global Holdings Inc.
      02.18.21


    • Grace Showcases its Latest Eco-Friendly and High-Performance Solutions at CHINACOAT 2020

      Grace Showcases its Latest Eco-Friendly and High-Performance Solutions at CHINACOAT 2020

      The booth is based on the theme "Engineered for Eco-friendly Systems."
      Coatings World staff 12.08.20

    • Breaking News
      SHW Analyst Comments on Disappointing 3Q17 Results, Trims Estimates

      SHW Analyst Comments on Disappointing 3Q17 Results, Trims Estimates

      ...
      10.27.17

    Loading, Please Wait..
    Trending
    • PPG Introduces High-Performance UF Membranes And Filter Elements
    • Axalta’s Brian Berube To Retire
    • Nouryon Reports Full Year 2022 Results With Strong Revenue Growth
    • Hubergroup Chemicals To Debut At The European Coatings Show
    • “MyCarbonFootprint”: BASF Launches Dashboard For Sustainable Procurement
    Breaking News
    • PPG, Flō-Optics Announce Exclusive Supplier Agreement for First Digitally Applied Optical Coatings
    • BASF Donates $5,000 to High School STEAM Education Programs in Chattanooga Area
    • Coating Additives Market Worth $10.5B by 2028: MarketsandMarkets
    • California Sports Surfaces Celebrates 70 Years
    • ROSS Offers Cost-Effective, Expertly Reconditioned Equipment
    View Breaking News >
    CURRENT ISSUE

    September 2023

    • Powder Coatings Market
    • Performance Enhancing Additives
    • The Role Of Kilowatt Hours In Measuring Mill Performance
    • View More >

    Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
    You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

    • About Us
    • Privacy Policy
    • Terms And Conditions
    • Contact Us

    follow us

    Subscribe
    Nutraceuticals World

    Latest Breaking News From Nutraceuticals World

    D2C Supplement Brand Launches Blood Sugar Support Supplement, Gluco-Control
    Natrol Launches First Non-Melatonin Sleep Supplement
    Metagenics Releases Consumer Survey on Menopausal Support Supplement
    Coatings World

    Latest Breaking News From Coatings World

    PPG, Flō-Optics Announce Exclusive Supplier Agreement for First Digitally Applied Optical Coatings
    BASF Donates $5,000 to High School STEAM Education Programs in Chattanooga Area
    Coating Additives Market Worth $10.5B by 2028: MarketsandMarkets
    Medical Product Outsourcing

    Latest Breaking News From Medical Product Outsourcing

    MPO's Most-Read Stories This Week—Sept. 30
    Dentsply Sirona Names Former NuVasive CEO Lucier as Chairman
    SeaStar Medical Gets Breakthrough Nod for Selective Cytopheretic Device
    Contract Pharma

    Latest Breaking News From Contract Pharma

    Univercells Expands into the U.S. With New Offices in Andover, MA
    Evecxia Therapeutics, Quotient Sciences Complete Clinical Milestone for Depression Treatment
    Ionis, Roche Partner on RNA-targeted Programs for AD and HD
    Beauty Packaging

    Latest Breaking News From Beauty Packaging

    ScentAir Debuts Room Sprays & More
    African Pride Launches On-Campus Activations
    Sharper Image Debuts Revel Hair Tools
    Happi

    Latest Breaking News From Happi

    Hair Searches in the US Change ‘Coarse’ with Growing Demand for Textured Hair Solutions
    Boss Bottled Celebrates 25th Anniversary
    In the Case of Efficacious Cosmetic Buys, Cost is Not A Factor Says Mintel
    Ink World

    Latest Breaking News From Ink World

    W+D to Premiere i-Jet 3 Inkjet at Printing United
    MicroDynamics, All Printing Resources Partner to Represent Veritas
    Weekly Recap: Wikoff Color, BASF, Latin America Top This Week’s Stories
    Label & Narrow Web

    Latest Breaking News From Label & Narrow Web

    TLMI's LLT grows, Labelexpo Europe details big numbers and more
    SABIC and partners launch bio-based IML solution for food packaging
    tesa completes expansion of Michigan manufacturing facility
    Nonwovens Industry

    Latest Breaking News From Nonwovens Industry

    Weekly Recap: Thomas Receives INDA Lifetime Technical Service Award, ExxonMobil Works with JL Goor
    Greentech Introduces Air Filter with Advanced Odor Elimination
    Ontex Divests Pakistan Operations to ASAIA Holding
    Orthopedic Design & Technology

    Latest Breaking News From Orthopedic Design & Technology

    ODT's Most-Read Stories This Week—Sept. 30
    Lazurite Adds Benchmark Medical as a Distributor for its ArthroFree Wireless Camera System
    ChitogenX Granted New U.S., Canadian ORTHO-R Patent
    Printed Electronics Now

    Latest Breaking News From Printed Electronics Now

    Weekly Recap: Mergers and Acquisitions, First Solar Top This Week’s Stories
    Jabil Posts Fourth Quarter, Fiscal Year 2023 Results
    Ink-Borne ‘Chiplets’ Could Lead to Printable Displays, Electronics and More

    Copyright © 2023 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

    AD BLOCKER DETECTED

    Our website is made possible by displaying online advertisements to our visitors.
    Please consider supporting us by disabling your ad blocker.


    FREE SUBSCRIPTION Already a subscriber? Login