Tronox in August
Tronox (TROX) continued its declining trend and tanked 12.2% in August, underperforming the S&P 500 (SPY). Its peers Chemours (CC) and Venator Materials (VNTR) fell 4.8% and 17.4%, respectively, while W.R. Grace (GRA) rose 4.9%.
Why Tronox fell
Tronox reported its second-quarter earnings in August. Its adjusted earnings per share of $0.31 beat analysts’ estimate. However, the biggest concern is that it has not received approval from the FTC (Federal Trade Commission) for the Cristal acquisition, and in fact, the FTC has filed a complaint. In August, Tronox received final approval for the acquisition from the European Commission. It has already received approvals from Australia, China, New Zealand, Turkey, South Korea, Colombia, and Saudi Arabia.
To facilitate the FTC approval, Tronox filed a Memorandum of Understanding with Venator Materials (VNTR) to divest Cristal’s Ashtabula TiO2 production complex, if required. The delay and complaint from the FTC have dragged down the stock.
Analysts have mixed opinions about Tronox. BMO cut its target price to $28 from $31. SunTrust Robinson Humphrey has rated Tronox a “buy” with a target price of $24.
The stock is trading 13.3% below its 100-day moving average of $18.04. However, its 14-day relative strength index of 43 indicates that the stock is neither overbought nor oversold. An RSI of 70 and above indicates that a stock is overbought, while an RSI of 30 and below indicates that a stock is oversold.