Solstice Advanced Materials (SOLS) Margin Compression Challenges Bullish Growth Narrative

Solstice Advanced Materials (SOLS) capped FY 2025 with Q4 revenue of US$987 million and basic EPS of US$0.26, alongside trailing twelve month revenue of US$3.9 billion and EPS of US$1.49 that sits against a 3.1% revenue increase and a trailing net margin that has moved from 15.8% to 6.1% over the past year. The company has seen revenue move from US$3.6 billion to around US$3.9 billion on a trailing basis while net income shifted from US$621 million to US$237 million, setting up a picture where top line growth meets sharply lower profitability that investors will be weighing against the latest earnings print.

See our full analysis for Solstice Advanced Materials.

With the numbers on the table, the next step is to see how this earnings profile lines up with the widely followed narratives around Solstice Advanced Materials, and where the data pushes back on those storylines.

Curious how numbers become stories that shape markets? Explore Community Narratives

Margins Squeezed Despite Revenue Progress

• On a trailing basis, revenue is about US$3.9b while net income is US$237 million, which works out to a 6.1% net margin versus 15.8% a year earlier, so the business is bringing less profit through on each sales dollar even with a 3.1% revenue uplift.
• What stands out for a cautious, more bearish take is how quarterly net income moved from US$133 million in FY 2024 Q4 to US$41 million in FY 2025 Q4, and the margin compression in the trailing data reinforces that concern about earnings quality even though headline revenue has climbed.
  • Bears point to this step down in net income, along with the weaker trailing margin, as a sign that costs or pricing are biting into profitability more than the simple revenue trend might suggest.
  • They also highlight that, with net margin now at 6.1% on US$3.9b of revenue, the company is earning a much smaller profit pool than the US$621 million of net income reported on US$3.6b of revenue a year earlier.

Stay curious about what could be pressuring those margins and whether that supports a more cautious view of SOLS right now. Then stack it up against the arguments in 🐻 Solstice Advanced Materials Bear Case for a fuller picture.

High P/E Multiple Meets Margin Pressure

• At a share price of US$78.03, Solstice trades on a trailing P/E of 52.3x, which sits well above both the peer average of 18.7x and the US chemicals industry average of 26.6x, even though trailing net margin has moved down to 6.1% from 15.8% over the last year.
• Supporters of a more bullish angle argue that a richer multiple can be justified by strong earnings growth forecasts, but the current numbers create a tension between that view and the recent profitability record.
  • Forecast earnings growth of about 21.25% per year and the shares trading roughly 21.7% below the DCF fair value of US$99.71 give bulls specific figures to point to when they say the price is not excessive.
  • At the same time, critics focus on the combination of a 52.3x P/E and compressed margins, questioning whether the current earnings base and leverage level support paying such a premium versus peers.

Growth Forecasts vs Recent EPS Swings

• Basic EPS over the last four reported quarters came in at US$0.26 in FY 2025 Q4, after a loss of US$0.22 per share in Q3 and US$0.84 in FY 2024 Q4, while trailing twelve month EPS now stands at US$1.49 compared with US$2.07 at the prior quarter on the same basis.
• Backers of the growth outlook point to the forecast 21.25% yearly earnings increase, yet the recent EPS pattern invites you to compare that upbeat view with the more mixed trailing figures.
  • On one hand, the move from a Q3 loss of US$35 million to Q4 net income of US$41 million shows the company can return to profitability within a short span, which growth oriented investors may see as a positive sign.
  • On the other hand, the drop in trailing EPS from US$2.07 at FY 2025 Q3 to US$1.49 at FY 2025 Q4, alongside the margin compression, suggests that any bullish case built on earnings acceleration needs to account for how uneven recent profitability has been.

If you want to see how other investors join the dots between these earnings twists and the long term story, Curious how numbers become stories that shape markets? Explore Community Narratives

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Solstice Advanced Materials's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Solstice Advanced Materials pairs a high 52.3x P/E and compressed 6.1% net margin with volatile EPS, so recent profitability looks uneven versus peers and its own history.

If those swings in earnings and margins make you cautious about paying up for this stock, you may wish to compare it with companies in our 85 resilient stocks with low risk scores that emphasise steadier fundamentals and lower overall risk.

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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