15 Sep

How Huntsman’s Valuation Compares


Huntsman’s forward price-to-earnings multiple

On September 13, 2017, Huntsman’s (HUN) one-year forward PE (price-to-earnings) multiple was 12.4x. To compare, peer Eastman Chemical’s (EMN) multiple was 10.8x. Forward PE multiples can be used to compare companies operating in the same industry.

How Huntsman’s Valuation Compares

Huntsman trades at premium

At present, Huntsman is trading at a premium to Eastman Chemical. Analysts expect Huntsman to post EPS (earnings per share) of $1.96  in fiscal 2017, representing 43.8% growth since fiscal 2016. Analysts forecast Huntsman’s EPS to be $2.08 in fiscal 2018, 6.5% higher than its expected 2017 EPS.

Eastman Chemical’s fiscal 2017 EPS are expected to be $7.52, 11.2% growth from fiscal 2016. Analysts expect its EPS to rise 8.4% between fiscal 2017 and fiscal 2018.

The agreement to combine Huntsman and Clariant has boosted Huntsman stock. The new company is expected to generate $400 million in cost synergies and drive growth. Also, the Venator spin-off is expected to create value for investors, resulting in the stock trading at a premium to peers.

Investors interested in Huntsman could invest in the ProShares Ultra Basic Materials ETF (UYM), which has invested 0.60% of its portfolio in Huntsman. The fund also provides exposure to Air Products and Chemicals (APD) and LyondellBasell (LYB), which had weights of 3.3% and 3.2%, respectively, as of September 13, 2017.

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