Where PolyOne Corporation (NYSE: POL) stock is heading

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PolyOne Corporation (NYSE: POL) stock rose 9.50% on July 11th, 2019 after the company has raised the outlook for the earnings per share for the second quarter of 2019. The stock slightly corrected over 2.2% on June 12th, 2019 but the road ahead looks positive.

For the second quarter 2019, the company expects adjusted earnings per share of $0.72-$0.74, up from its prior estimate of $0.68. The company expects to achieve better than expected margins in all segments from pricing actions, improved mix and cost reductions. Further, Specialty Engineered Materials segment is overcoming continued weakness in Europe and China with gains in composites and wire and cable applications.  The company had already invested heavily in composites over the last few years. The company is also experiencing modest improvements in certain end markets such as construction in North America.  This is positively impacting the company’s Performance Products and Solutions segment more than the previous expectations at the beginning of the quarter.

Where PolyOne Corporation (NYSE: POL) stock is heading

Meanwhile, for the first quarter results for 2019, the company has reported the consolidated revenue of $900 million, which is flat with the prior year as growth from acquisitions of 3.5% was offset by a 1.5% reduction in organic sales and a 2% impact due to unfavorable foreign exchange. The company experienced weaker demand in certain end markets and unfavorable foreign exchange during the first quarter, which resulted in a year over year decline in sales and earnings. The key drivers wer lower automotive sales in Europe and China which impacted Color, Additives and Inks (Color) and Specialty Engineered Materials (SEM), and a decline in construction related sales, which primarily impacted Performance Products and Solutions (PPS) in North America. Composite sales increased 10% organically driven by new business in consumer and electrical end markets.  Combined with strong performance from the company’s January 2019 acquisition of Fiber-Line, composites-led growth added 17% to SEM operating income over the prior year first quarter. Fiber-Line had the best quarter in its history due to the continued build-out of 4G and emerging 5G network infrastructure.  Sustainable solutions include next generation packaging technologies which extend shelf-life for perishable beverages.  Sales in these product applications increased 34% in China compared to the first quarter of last year.

Additionally, POL has already declared a quarterly cash dividend of nineteen and a half cents ($0.195) per share on the common stock outstanding, to be paid on July 10, 2019, to stockholders of record on June 14, 2019.

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