Public Joint Stock Company Acron (MISX:AKRN), a RUРУБ168.54B mid-cap, is a chemicals company operating in an industry which is sensitive to changes in the business cycle, as it supplies materials for construction activities. In addition to cyclicality, chemicals companies face the issue of environmental concerns. This is a key risk that investors have to keep in mind when looking at stocks such as Acron due to the risky nature of its activities, which may impact future cash flows. Basic material analysts are forecasting for the entire industry, a positive double-digit growth of 12.61% in the upcoming year , and a massive growth of 38.38% over the next couple of years. However this rate still came in below the growth rate of the RU stock market as a whole. Is the chemicals industry an attractive sector-play right now? Below, I will examine the sector growth prospects, as well as evaluate whether Acron is lagging or leading its competitors in the industry. View our latest analysis for Acron
What’s the catalyst for Acron’s sector growth?
Altogether the basic materials sector seems to be predominantly mature in terms of its industry life cycle. Companies appear to be vastly competitive and consolidation seems to be a natural trend. There are plenty of emerging trends to deal with across the board including the reduction of waste, raw material inflation, and innovation in global supply chain management. In the past year, the industry delivered negative growth of -27.50%, underperforming the RU market growth of 18.40%. Acron lags the pack with its negative growth rate of -51.30% over the past year, which indicates the company will be growing at a slower pace than its chemicals peers. As the company trails the rest of the industry in terms of growth, Acron may also be a cheaper stock relative to its peers.
Is Acron and the sector relatively cheap?
The chemicals industry is trading at a PE ratio of 10.22x, relatively similar to the rest of the RU stock market PE of 7.53x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a higher 25.25% compared to the market’s 12.13%, potentially illustrative of past tailwinds. On the stock-level, Acron is trading at a PE ratio of 12.63x, which is relatively in-line with the average chemicals stock. In terms of returns, Acron generated 15.68% in the past year, which is 9.57% below the chemicals sector.
Next Steps:Acron has been a chemicals industry laggard in the past year. It delivered lower earnings growth compared to its peers in the near term, and it is also trading at a PE in-line with these companies. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the materials sector. However, before you make a decision on the stock, I suggest you look at Acron’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has AKRN’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Acron? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!