CHICAGO, Dec. 04, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includethe Dow Chemical (NYSE:DOW-Free Report), W. R. Grace & Co. (NYSE:GRA-Free Report), DuPont (NYSE:DD-Free Report), The Carlyle Group (Nasdaq:CG-Free Report) and Genuine Parts Company (NYSE:GPC-Free Report).
Dow Chemical (NYSE:DOW-Free Report) continues to seek opportunities to optimize its portfolio by selectively spinning off or selling its assets. The chemical giant is planning to exit a major portion of its chlorine business that has been in operation for over 100 years. Commodity chemicals assets that are being identified for separation represent up to $5 billion in revenues and includes roughly 40 manufacturing plants across 11 sites.
The move is in sync with the Midland, MI-based company's portfolio management plans and its strategy to focus on high-margin, fast-growing businesses, including agriculture and electronics, that deliver greater returns than cyclical commodity products.
Assets to be carved out include Dow's U.S. Gulf Coast Chlor-Alkali and Chlor-Vinyl facilities, global chlorinated organics production facilities, global Epoxy business and brine and select assets supporting operations in Freeport, TX and Plaquemine, LA, as well as energy operations in Plaquemine.
Separately, Dow also divulged its plans to shutter roughly 800,000 tons of chlorine and caustic equivalent capacity in Freeport. Supply from new plants that are scheduled come on stream with the start-up of Dow's joint venture with Mitsui early next year will replace the capacity being shut down.
Jim Fitterling, Dow's Executive Vice President, will oversee the separation activities. The company has retained financial advisors to explore all separation alternatives (including spin-offs, divestitures and joint ventures) for these assets and plans to carry out transaction activities for these businesses within the next 12-24 months.
Investors reacted positively to the news as Dow's shares rose as much as 3.3% in the trading session yesterday. The stock eventually closed at $39.98, gaining around 2.4% for the day. Dow's shares are up roughly 27% so far this year.
Dow, a Zacks Rank #3 (Hold) stock, continues to face challenges in Europe due to soft economic conditions in the region. In the Performance Materials segment, the Epoxy business is struggling with underperformance amid tough competition and industry overbuilding.
Dow continues to seek opportunities to optimize its portfolio by selectively divesting underperforming assets that are exposed to raw material price fluctuations. The company, in October, signed an agreement to divest the polypropylene licensing catalyst business to W. R. Grace & Co. (NYSE:GRA-Free Report) for $500 million. W. R. Grace closed the takeover yesterday.
Dow has jettisoned non-core assets worth roughly $10 billion since 2009. It has completed or announced transactions totaling $700 million over the last twelve months.
CEO Andrew N. Liveris, in third-quarter 2013 earnings call, said that the company plans to mop up at least $3 billion to $4 billion from non-core asset sales over the next 18-24 months, above the prior expectations of $1.5 billion. Proceeds from these transactions are expected to be used for boosting shareholder returns, reducing interest expenses and organic growth investments.
Dow is also aggressively pursuing its cost reduction and efficiency programs. As part of the move, the company is slashing headcount, shuttering plants and pruning capital spending on low-priority projects.
Dow's compatriot DuPont (NYSE:DD-Free Report) is also actively engaged in sell/spin-off of its low-margin businesses as part of its strategy to gradually shift focus to high growth businesses. DuPont is spinning off its struggling performance chemicals unit as well as glass laminating solutions and vinyls business as part of the move. The company, earlier this year, sold its performance coatings business to equity firm The Carlyle Group (Nasdaq:CG-Free Report) for $4.9 billion.
Dual Acquisitions for Genuine Parts
Subsidiaries of Genuine Parts Company (NYSE:GPC-Free Report) announced two acquisitions on Monday, which are expected to cumulatively boost the company's annual revenues by more than $115 million. Motion Industries, the industrial group of the company, completed the acquisition of industrial distributor Paragon Service & Supply, Inc.
Lima, Ohio-based Paragon provides custom-designed tooling to metalworking customers in the area. This acquisition is expected to improve Genuine Parts' annual revenues by $15 million.
Concurrently, Motion Industries (Canada), Inc., an indirect wholly-owned subsidiary of Motion Industries, announced an agreement to purchase 100% of the issued and outstanding common shares of Commercial Solutions Inc. (CSI). The acquisition is subject to customary closing conditions and approval from shareholders as well as applicable regulatory bodies and courts.
The acquisition of Edmonton, Alberta-based CSI is estimated to culminate in the first quarter of 2014. It is expected to generate annual revenues of over $100 million for Genuine Parts.
CSI is among the top independent national distributors of industrial supplies in Canada. It distributes bearings and power transmission products, complete solutions for drilling rigs and industrial and safety supplies to industrial consumers. CSI has operations in 22 locations in Canada and one in the U.S.
Genuine Parts reported a 1% year-over-year increase in earnings per share to $1.12 in third-quarter 2013 from $1.11. However, earnings missed the Zacks Consensus Estimate by 8 cents.
Revenues in the quarter grew 9.2% year over year to $3.68 billion, missing the Zacks Consensus Estimate of $3.74 billion. The year-over-year improvement was due to hike in revenues from the Automotive Parts segment, partially offset by decline in demand in non-automotive businesses.
Currently, Genuine Parts carries a Zacks Rank #4 (Sell).
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.