A Look at Arkema (ENXTPA:AKE) Valuation After Third-Quarter Earnings Disappoint

Arkema (ENXTPA:AKE) released its third quarter results, showing a sharp drop in both sales and profits compared to the same period last year. Sales and net income fell, underscoring ongoing business challenges.

See our latest analysis for Arkema.

Following this earnings miss, Arkema’s share price has come under pressure, contributing to a 19.5% decline over the past three months and a steep 29.5% drop year-to-date. The one-year total shareholder return stands at -28.9%, highlighting persistent headwinds that have outweighed any short-term gains.

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With shares trading at a considerable discount to analyst targets and recent earnings casting doubt, investors may question whether Arkema is undervalued at current levels or if weak results serve as a warning that markets have already priced in growth risks.

Most Popular Narrative: 28.5% Undervalued

Arkema’s most popular narrative sets a fair value of €70.63 per share, meaning the current price of €50.50 is viewed as materially below what analysts expect based on their models. This backdrop highlights a gap between market pessimism and the consensus long-term outlook for the company.

Significant investments in new production capacity, including the Singapore biobased polyamide plant, the U.S. PVDF expansion, and additives facilities targeting refining and biofuel markets, position Arkema to capture accelerated demand growth from the shift to renewable energy, electric mobility, and energy storage. These developments are expected to drive topline revenue growth and margin improvement as these assets ramp up.

Read the complete narrative.

What’s the math behind this bullish scenario? It comes down to a handful of optimistic forecasts about future revenue, profit margins, and how much investors will pay for earnings a few years from now. Want a closer look at the numbers that could spark a re-rating in Arkema’s shares? Dig into the details of the projections—they might just surprise you.

Result: Fair Value of €70.63 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, macroeconomic weakness and Arkema’s high exposure to cyclical end-markets could quickly undermine even the most optimistic forecasts for a turnaround.

Find out about the key risks to this Arkema narrative.

Another View: Market Ratios Tell a Different Story

While Arkema appears significantly undervalued by long-term fair value estimates, its price-to-earnings ratio of 30x is well above the European Chemicals industry average of 17.3x. It is also higher than the fair ratio of 24.3x that the market could eventually settle on. This suggests investors may be pricing in future risks, not opportunities. Could a change in market sentiment bring the stock closer to its fair ratio?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Arkema Narrative

If you have your own perspective or want to dig deeper into the data, you can build a custom narrative for Arkema in just a few minutes. Do it your way.

A great starting point for your Arkema research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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