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A. Schulman Downgraded to Strong Sell on Soft Prospects - Analyst Blog

Zacks Investment Research downgraded A. Schulman, Inc. SHLM to a Zacks Rank #5 (Strong Sell) on Jul 9, 2015. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market.

Why the Downgrade?

A. Schulman failed to impress shareholders with its third-quarter fiscal 2015 (ended May 31, 2015) results. Disappointment over the results has weakened the company’s investment value, leading to an 8.6% fall in the share price since Jul 6. A brief snapshot of the company’s quarterly results will justify the resentment among investors.  

Earnings of 72 cents per share came in below the Zacks Consensus Estimate of 76 cents. Also, the bottom line declined 2.7% year over year. Revenues decreased 13.1% year over year, severely hit by unfavorable foreign currency movements.  

For fiscal 2015, A. Schulman anticipates approximately 5 cents per share of dilution from the recently completed Citadel acquisition as well as roughly 8 cents per share of dilutive impact related to convertible special stocks. As a result, earnings are presently projected within $2.37−$2.42 per share versus the previously guided range of $2.50−$2.55.  

A dismal performance and weak outlook have made investors skeptical about A. Schulman’s prospects. Over the last 7 days, the Zacks Consensus Estimate for the stock has fallen 2.8% to $2.39 per share for fiscal 2015.

Stocks to Consider

A. Schulman, Inc. currently has a market capitalization of $1.1 billion. Better-ranked stocks in the chemical-plastics industry include Kuraray Co. Ltd. KURRY, Trinseo SA TSE and Kraton Performance Polymers Inc. KRA. While Kuraray Co. sports a Zacks Rank #1 (Strong Buy), both Trinseo SA and Kraton Performance Polymers carry a Zacks Rank #2 (Buy).

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KRATON PERFORM (KRA): Free Stock Analysis Report
 
SCHULMAN(A) INC (SHLM): Free Stock Analysis Report
 
TRINSEO SA (TSE): Free Stock Analysis Report
 
KURARAY CO U-AD (KURRY): Free Stock Analysis Report
 
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