Olin (OLN) Stock Hits Fresh 52-Week High: What's Driving It?
Impressive Q2 performance and upbeat outlook have contributed to the rally in Olin's (OLN) share.
Olin Corporation’s OLN shares scaled a fresh 52-week high of $51.15 on Aug 27, before closing the session at $50.64.
The company, currently carrying a Zacks Rank #2 (Buy), has a market cap of around $8.1 billion.
The stock has skyrocketed 350.1% in the past year compared with the industry and the S&P 500’s 31.9% and 27.4% rise, respectively.
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What’s Driving Olin?
Strong second-quarter earnings performance and an upbeat outlook for the third quarter have contributed to the upside in Olin’s share price. Its adjusted earnings of $1.73 per share in the second quarter topped the Zacks Consensus Estimate of $1.45. Revenues shot up 79% year over year to $2,221.3 million and also surpassed the Zacks Consensus Estimate of $2,052.2 million. The company witnessed strong sales across all its segments in the second quarter on the back of higher pricing and volumes.
In its last earnings call, Olin stated that it anticipates a sequential improvement in third-quarter results across its Chlor Alkali Products and Vinyls, Epoxy, and Winchester segments. It also expects adjusted EBITDA to improve sequentially in the quarter.
The company remains committed to improving its cost structure and efficiency, and driving productivity through a number of projects. It currently has more than 1,200 active productivity projects that are expected to contribute to savings in 2021. It expects productivity measures to deliver $100 million of net savings in 2021.
Olin’s Winchester segment is poised to benefit from the Lake City U.S. Army ammunition contract. The multi-year contract is expected to significantly boost annual profitability of the unit and increase Winchester's annual revenues by $450-$550 million. Sales from the segment more than doubled year over year in the second quarter driven by higher commercial and military sales as well as rise in commercial ammunition pricing.
Earnings estimates for Olin have also been going up over the past three months. The Zacks Consensus Estimate for 2021 has increased 21.2%. The consensus estimate for the third quarter has also been revised 45% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
The Zacks Consensus Estimate for 2021 earnings for Olin is currently pegged at $6.62, implying growth of 590.4% from the year-ago reported number. Earnings are expected to register 1,115% growth in third-quarter 2021.
Olin Corporation Price and Consensus
Other Stocks to Consider
Other top-ranked stocks in the basic materials space include BASF SE BASFY and Avient Corporation AVNT, each flaunting a Zacks Rank #1 (Strong Buy). A top-ranked stock in the sector is Dow Inc. DOW, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
BASF has a projected earnings growth rate of 96.7% for the current year. The company’s shares have rallied 28.3% in a year.
Avient has a projected earnings growth rate of 75.1% for the current year. The company’s shares have appreciated 105.7% in a year.
Dow has a projected earnings growth rate of 403% for the current year. The company’s shares have risen 44.9% in a year.
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