Can Olin's (OLN) New Supply Deal Offset Credit Outlook Concerns?

• Olin's VP & Treasurer Teresa M Vermillion recently sold 4,500 shares and exercised options, while Braskem announced a supply partnership with Olin for ethylene dichloride in Brazil following the end of the Blue Water Alliance joint venture.
• Meanwhile, both Moody's and S&P Global Ratings revised Olin's outlook to negative, reflecting concerns about weak earnings and stressed credit metrics.
• We'll examine how the revised credit outlook from major agencies could influence Olin's overall investment narrative and forward-looking prospects.

Find companies with promising cash flow potential yet trading below their fair value.

Olin Investment Narrative Recap

To believe in Olin, an investor needs confidence in the company’s ability to manage persistent global chemical overcapacity and pricing pressure, particularly in ethylene dichloride (EDC), amidst volatile earnings and increased competitive threats. The recent supply partnership with Braskem may enhance market access, but credit outlook downgrades from Moody’s and S&P could weigh on short-term sentiment and amplify concerns around the firm's stressed financial metrics; the bigger risk remains continued margin pressure from weak EDC pricing and overcapacity, which this news does not materially change.

The Braskem supply agreement is the headline announcement tied closely to the near-term outlook for Olin’s core chlor-alkali and vinyls businesses. While this initiative could help reorient sales flows after the dissolution of the Blue Water Alliance joint venture, meaningful relief from ongoing EDC pricing and overcapacity challenges will require broader improvements in market fundamentals.

By contrast, investors should be aware that persistent global EDC overcapacity and price weakness...

Read the full narrative on Olin (it's free!)

Olin's outlook anticipates $7.4 billion in revenue and $375.3 million in earnings by 2028. This projection is based on a 3.6% annual revenue growth rate and an increase in earnings of $389.4 million from the current -$14.1 million.

Uncover how Olin's forecasts yield a $24.73 fair value, a 17% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members have offered five fair value estimates for Olin, ranging widely from US$24.73 to US$104.96 per share. With such differing views on worth, also consider that ongoing oversupply and weak EDC prices remain a significant risk for future performance.

Explore 5 other fair value estimates on Olin - why the stock might be worth over 4x more than the current price!

Build Your Own Olin Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Olin research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.
• Our free Olin research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Olin's overall financial health at a glance.

Want Some Alternatives?

Right now could be the best entry point. These picks are fresh from our daily scans. Don't delay:

• These 13 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.
• AI is about to change healthcare. These 30 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.
• Trump has pledged to "unleash" American oil and gas and these 22 US stocks have developments that are poised to benefit.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com