LSB Industries, Inc. (NYSE:LXU) Misses but Shares Rise on Future

LSB Industries, Inc. (NYSE:LXU)

LSB Industries, Inc. (NYSE:LXU) reported Q4 2016 and full year earnings results yesterday. The firm posted a loss of $21.5 million for Q4, 2016 on revenues of $85.4 million which missed analyst expectations by over $2 million. Net sales from continuing operations of $85.4 million for the fourth quarter of 2016 compared to $90.0 million for Q4 2015. That translated into a loss of $1.06/share. Losses, adjusted for one-time gains and costs, came to $1.14/share which was lower than the street number of $1.36. The Oklahoma City, OK-based firm posted revenue for the year of $374.6 million, a net income of $112.2 million or $2.54/share.

Despite missing expectations, LXU shares prices are strong today on heavy volume. At LXU’s height, shares were trading up over 27% ($11.28) in late-morning trading. Shares are trading at over seven times their pro-rata average daily volumes. Also of note – should LXU remain at these levels the shares will have breached their 20, 50, and 200-day moving averages. LXU shares have more than doubled since November.

LSB Industries, Inc. (NYSE:LXU) manufactures and sells chemical products for the agricultural, mining, and industrial markets. The company owns and operates facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma, and operates a facility within a global chemical company’s complex in Baytown, Texas. LSB’s products are sold through distributors and directly to end customers throughout the United States.

Analysts have given LSB Industries, Inc. (NYSE:LXU) a strong vote of confidence – both firms that cover the company have assigned LXU shares a rating of “Strong Buy”. However, sales have been flat to down for the last several years. In 2011 sales totaled $805.3 million but the firm only reached $711.8 million in 2015. Unfortunately, in their earnings release, LSB Industries, Inc. (NYSE:LXU) referenced continued pricing pressure for their agricultural lines. Lack of sufficient margin would explain the downward EPS trend. In 2011 LXU enjoyed an EPS of $3.81 but in 2015 it turned into an EPS loss of $1.67.

We would be remiss if we did not turn our reader’s attention to the “short float” and “short ratio” figures in the below table. Both are significant.

2/28/2017
Ticker Symbol LXU
Last Price a/o 11:55 AM EST  $                    10.93
Average Volume                    496,420
Market Cap (mlns)  $                  259.37
Sales (mlns) $466.80
Shares Outstanding (mlns) 29.34
Share Float (mlns) 20.58
Shortable Yes
Optionable Yes
Inside Ownership 4.20%
Short Float 29.96%
Short Interest Ratio 12.42
Quarterly Return 4.12%
YTD Return 4.99%
Year Return 56.18%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Author: Marcus Anderson

Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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