NYSE:KRA

Stock Analysis Report

Executive Summary

Kraton Corporation manufactures and sells styrenic block copolymers and other engineered polymers in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.

Rewards

Trading at 26% below its fair value

Risk Analysis

Interest payments are not well covered by earnings

Highly volatile share price over past 3 months

Large one-off items impacting financial results



Snowflake Analysis

Undervalued with poor track record.


Similar Companies

Share Price & News

How has Kraton's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: KRA's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-14.8%

KRA

-4.3%

US Chemicals

-2.7%

US Market


1 Year Return

-31.4%

KRA

-5.0%

US Chemicals

21.2%

US Market

Return vs Industry: KRA underperformed the US Chemicals industry which returned 1.6% over the past year.

Return vs Market: KRA underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

KRAIndustryMarket
7 Day-14.8%-4.3%-2.7%
30 Day-23.3%-4.9%0.09%
90 Day-21.0%-1.2%6.9%
1 Year-31.4%-31.4%10.1%-5.0%23.8%21.2%
3 Year-29.3%-29.3%27.7%3.5%48.1%38.6%
5 Year-6.3%-6.3%42.5%11.4%72.5%53.4%

Price Volatility Vs. Market

How volatile is Kraton's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Kraton undervalued compared to its fair value and its price relative to the market?

38.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: KRA ($23.61) is trading below our estimate of fair value ($31.91)

Significantly Below Fair Value: KRA is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: KRA is good value based on its PE Ratio (8.4x) compared to the Chemicals industry average (20.8x).

PE vs Market: KRA is good value based on its PE Ratio (8.4x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate KRA's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: KRA is good value based on its PB Ratio (1x) compared to the US Chemicals industry average (2.2x).


Next Steps

Future Growth

How is Kraton forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

-0.8%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if KRA's forecast earnings growth is above the savings rate (1.7%).

Earnings vs Market: Insufficient data to determine if KRA's earnings are forecast to grow faster than the US market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: KRA's revenue is expected to decline over the next 3 years (-0.8% per year).

High Growth Revenue: KRA's revenue is forecast to decline over the next 3 years (-0.8% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: KRA's Return on Equity is forecast to be low in 3 years time (11.4%).


Next Steps

Past Performance

How has Kraton performed over the past 5 years?

32.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: KRA has a large one-off gain of $20.7M impacting its September 30 2019 financial results.

Growing Profit Margin: KRA's current net profit margins (4.8%) are lower than last year (5.8%).


Past Earnings Growth Analysis

Earnings Trend: KRA's earnings have grown significantly by 32.2% per year over the past 5 years.

Accelerating Growth: KRA's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: KRA had negative earnings growth (-23.8%) over the past year, making it difficult to compare to the Chemicals industry average (-17%).


Return on Equity

High ROE: KRA's Return on Equity (11.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Kraton's financial position?


Financial Position Analysis

Short Term Liabilities: KRA's short term assets ($771.0M) exceed its short term liabilities ($340.8M).

Long Term Liabilities: KRA's short term assets ($771.0M) do not cover its long term liabilities ($1.8B).


Debt to Equity History and Analysis

Debt Level: KRA's debt to equity ratio (179.9%) is considered high.

Reducing Debt: KRA's debt to equity ratio has increased from 63.4% to 179.9% over the past 5 years.

Debt Coverage: KRA's debt is not well covered by operating cash flow (15.5%).

Interest Coverage: KRA's interest payments on its debt are not well covered by EBIT (1.9x coverage).


Balance Sheet

Inventory Level: KRA has a high level of physical assets or inventory.

Debt Coverage by Assets: KRA's debt is not covered by short term assets (assets are 0.5x debt).


Next Steps

Dividend

What is Kraton's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage2.2%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate KRA's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate KRA's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if KRA's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if KRA's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of KRA's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Kraton's salary, the management and board of directors tenure and is there insider trading?

3.8yrs

Average management tenure


CEO

Kevin Fogarty (53yo)

12yrs

Tenure

US$5,418,697

Compensation

Mr. Kevin M. Fogarty has been the Chief Executive Officer and President of Kraton Corporation since January 14, 2008 and the Chief Executive Officer of Kraton Performance Polymers Limited. Mr. Fogarty serv ...


CEO Compensation Analysis

Compensation vs Market: Kevin's total compensation ($USD5.42M) is above average for companies of similar size in the US market ($USD2.53M).

Compensation vs Earnings: Kevin's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.8yrs

Average Tenure

53yo

Average Age

Experienced Management: KRA's management team is considered experienced (3.8 years average tenure).


Board Age and Tenure

8.3yrs

Average Tenure

60yo

Average Age

Experienced Board: KRA's board of directors are considered experienced (8.3 years average tenure).


Insider Trading

Insider Buying: KRA insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$103,73507 Nov 19
Christopher Russell
EntityIndividual
Role
Chief Accounting Officer
VP & Chief Accounting Officer
Shares4,241
Max PriceUS$24.46
SellUS$354,23606 Nov 19
Melinda Conley
EntityIndividual
Shares14,205
Max PriceUS$25.71
SellUS$402,84801 Aug 19
Holger Jung
EntityIndividual
Role
Senior Key Executive
Senior VP & President of Polymer Segment
Shares13,102
Max PriceUS$31.04
SellUS$198,59230 Apr 19
Jose Fernando Haddad
EntityIndividual
Role
Chief Operating Officer
Senior Vice President of Global Operations
Shares6,000
Max PriceUS$33.10

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Kevin Fogarty (53yo)

    President

    • Tenure: 12yrs
    • Compensation: US$5.42m
  • H. Shiels

    Director of Investor Relations

    • James Simmons (53yo)

      Senior VP

      • Tenure: 5.1yrs
      • Compensation: US$1.26m
    • Holger Jung (56yo)

      Senior VP & President of Polymer Segment

      • Compensation: US$1.30m
    • Atanas Atanasov (46yo)

      Senior VP & CFO

      • Tenure: 0.7yrs
    • Jose Fernando Haddad (55yo)

      Senior Vice President of Global Operations

      • Tenure: 4.8yrs
    • Chris Russell (53yo)

      VP & Chief Accounting Officer

      • Tenure: 4.6yrs
      • Compensation: US$704.62k
    • Heba Botros (49yo)

      Vice President of Corporate Development & Strategy

      • Tenure: 3.1yrs
    • Vijay Mhetar (48yo)

      Senior VP & Chief Technology Officer

      • Tenure: 3yrs
      • Compensation: US$1.37m
    • Marcello Boldrini (57yo)

      Senior VP & Chemical Segment President

      • Tenure: 2.8yrs
      • Compensation: US$1.10m

    Board Members

    • Dan Smith (73yo)

      Chairman & Presiding Director

      • Tenure: 10.3yrs
      • Compensation: US$310.01k
    • Karen Twitchell (64yo)

      Independent Director

      • Tenure: 10.1yrs
      • Compensation: US$192.51k
    • Shawn Gallagher (55yo)

      Independent Director

      • Tenure: 8.5yrs
      • Compensation: US$197.51k
    • Anna Catalano (60yo)

      Independent Director

      • Tenure: 8.3yrs
      • Compensation: US$180.01k
    • Mark Blinn (57yo)

      Independent Director

      • Tenure: 2.4yrs
      • Compensation: US$180.01k
    • Kevin Fogarty (53yo)

      President

      • Tenure: 12yrs
      • Compensation: US$5.42m
    • Dominique Fournier (68yo)

      Independent Director

      • Tenure: 7.9yrs
      • Compensation: US$190.01k
    • Shelley Bausch (53yo)

      Independent Director

      • Tenure: 2.4yrs
      • Compensation: US$180.01k
    • Billie Williamson (66yo)

      Non-Executive Director

      • Tenure: 1.4yrs
      • Compensation: US$62.39k

    Company Information

    Kraton Corporation's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Kraton Corporation
    • Ticker: KRA
    • Exchange: NYSE
    • Founded:
    • Industry: Specialty Chemicals
    • Sector: Materials
    • Market Cap: US$602.054m
    • Shares outstanding: 31.70m
    • Website: https://www.kraton.com

    Number of Employees


    Location

    • Kraton Corporation
    • 15710 John F. Kennedy Boulevard
    • Suite 300
    • Houston
    • Texas
    • 77032
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    KRANYSE (New York Stock Exchange)YesCommon SharesUSUSDDec 2009
    K21DB (Deutsche Boerse AG)YesCommon SharesDEEURDec 2009

    Biography

    Kraton Corporation manufactures and sells styrenic block copolymers and other engineered polymers in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates in two segments, Polymer and Chemical. The Polymer segment offers performance products, including styrene-butadiene-styrene and styrene-isoprene-styrene; and specialty polymers, such as hydrogenated styrenic block copolymers, as well as isoprene rubber and isoprene rubber latex for use in medical and personal care products, adhesives, tackifiers, paints, and coatings. The Chemical segment provides pine-based specialty products that include rosin-based tackifiers for packaging and pressure-sensitive adhesive applications; terpene-based tackifiers for bookbinding, hygiene, and pressure-sensitive adhesive applications; alpha-methyl-styrene (AMS) resins for bookbinding and pressure-sensitive adhesive applications; and hot melt polyamides for flexible packaging. It also provides rosin-based binders for the thermoplastic pavement marking submarket; tall oil fatty acids; tall oil rosin; distilled tall oil; and tall oil pitch; and produces insoluble maleic-based tackifiers, as well as bitumen additives. In addition, this segment offers terpene-based tread enhancement resins and AMS-based tread enhancement additives; dimer acids and terpene fractions for fuel additives, oilfield chemicals, mining fluids, coatings, metalworking fluids, and lubricants The company sells its products through various channels, including direct sales force, marketing representatives, and distributors under the Kraton and Cariflex brands. The company was formerly known as Kraton Performance Polymers, Inc. and changed its name to Kraton Corporation in September 2016. Kraton Corporation is based in Houston, Texas. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/28 00:51
    End of Day Share Price2020/01/27 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.