Simple Concepts Research Group

Is Huntsman (NYSE: HUN) A Good Buy At This Price?

by | Aug 1, 2022 | 52 Week Lows, Materials

huntsman hun stock valuation

Huntsman (HUN) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Huntsman (HUN) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Huntsman Fundamentals

HUN Stock Rating

Stock Price Target: $43.58

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Huntsman in comparison to the Chemical industry and the S&P 500.

Huntsman is a Mid Cap company with a Market Cap of $6.14B.

How are investors using Huntsman earnings yield to assess the company?

Huntsman (HUN)_ Earnings Yield in Comparison to the Chemical Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Huntsman is 17.89%, in comparison to 4.79% for the S&P 500 and 2.67% for the 10-year treasury bond. The median earnings yield for the Chemical industry is 11.54%.

What does Huntsman Price-to-Earnings Ratio (P/E) tell investors about the company?

Huntsman (HUN)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Chemical Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Huntsman is currently trading at a P/E of 5.39. The P/E for the Chemical industry is 16.05 and the P/E for the S&P 500 is 20.87.

What is the current Price-to-Sales Ratio (P/S) for Huntsman?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Huntsman is currently trading at a P/S of 0.76. The P/S for the Chemical industry is 0.98 and the P/S for the S&P 500 is 2.56.

How does Huntsman Price-to-BookRatio (P/B) compare to the Chemical industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Huntsman P/B ratio is 1.42. The P/B for the Chemical industry is 2.62 and the P/B for the S&P 500 is 4.10.

How attractive is Huntsman Return on Invested Capital (ROIC) to investors?

Huntsman (HUN)_ Return on Invested Capital in Comparison to the Chemical Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Huntsman ROIC is currently 20.25% in comparison to 9.87% for the Chemical industry and 9.10% for the S&P 500.

Huntsman (HUN)_ Price Target & 52-Week Price Range (1)

How has TICKER stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Huntsman has traded between the range of $24.09 and $41.65.

The current Analyst Price Target for Huntsman is $43.58.

What is Huntsman YOY Performance in comparison to its industry and the total market?

The YOY performance for Huntsman is 9.95%. The Chemical industry has a YOY performance of -4.73% in comparison to the YOY S&P 500 performance of -6.16%.

Huntsman (HUN)_ YOY Performance in Comparison to the Chemical Industry and the S&P 500

Recent Financial Results (Q1, 2022)

  • Net income of $240M compared to net income of $100M in the prior year period
  • Adjusted net income of $256M compared to adjusted net income of $147M in the prior year period
  • Adjusted EBITDA of $415M compared to adjusted EBITDA of $289M in the prior year period
  • Net cash provided by operating activities from continuing operations was $85M. Free cash flow from continuing operations of $16M for the first quarter 2022 compared to an outflow of $114M in the prior year period
  • Repurchased approximately 5.5M shares for approximately $210M in the first quarter 2022

Stock Price Target: $43.58

Company Overview

HUN Stock Rating

Huntsman Corporation manufactures and sells differentiated organic chemical products worldwide. The company operates through four segments: Polyurethanes, Performance Products, Advanced Materials, and Textile Effects.

The company’s products are used in a range of applications, including adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, electronics, insulation, medical, packaging, coatings and construction, power generation, refining, synthetic fiber, textile chemicals, and dye industries. Huntsman Corporation was founded in 1970 and is headquartered in The Woodlands, Texas.

Be sure to add Huntsman (HUN) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.