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Taking Stock of W.R. Grace's Leverage Situation after 2Q17

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Part 5
Taking Stock of W.R. Grace's Leverage Situation after 2Q17 PART 5 OF 5

Can W.R. Grace Turn Things Around in the Rest of 2017?

W.R. Grace’s stock performance

As of September 21, 2017, W.R. Grace (GRA) stock has remained muted and has underperformed for the year. It has risen 7.2% YTD (year-to-date) and underperformed the broad-based SPDR S&P 500 ETF (SPY), which has risen 11.6% in the same period. GRA has also underperformed its peers Westlake Chemical (WLK), Huntsman (HUN), and Eastman Chemical (EMN), which have risen 44.2%, 45.0%, and 14.1%, respectively.

Can W.R. Grace Turn Things Around in the Rest of 2017?

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Journey so far

In the first two quarters of 2017, GRA exceeded analysts’ expectations and maintained its guidance for fiscal 2017. However, debt continues to be GRA’s biggest concern. Its aggressive share repurchases and better operating expenses could drive its future earnings growth. Positive developments, including the acquisition of Evonik dental silica and Huber Defoamer product lines, could drive up its top line and bottom line. GRA was also able to win a few new business contracts from its UNIPOL PP Process Technology. That’s expected to drive growth and could help the stock recover lost ground in the rest of 2017.

Moving average and RSI

Although GRA stock has largely remained sideways, it’s still trading 2.8% above its 100-day moving average of $70.54. GRA’s 14-day RSI (relative strength index) of 62 indicates that the stock is neither overbought nor oversold. An RSI of 30 and below indicates a stock has moved into an oversold position temporarily, while an RSI of 70 and above indicates that the stock has moved into an overbought position temporarily.

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