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The Zacks Chemicals Specialty industry is facing significant challenges due to sluggish demand stemming from economic slowdowns in Europe and China, exacerbated by elevated input, supply chain, and logistics costs. Companies like Axalta Coating Systems Ltd. (AXTA), Hawkins, Inc. (HWKN), and AdvanSix Inc. (ASIX) are implementing strategic cost-cutting measures to navigate this difficult environment. The industry’s Zacks Rank is currently #218, placing it in the bottom 13% of over 250 industries.
Over the past year, the Zacks Chemicals Specialty industry has underperformed the broader market, showing a loss of 9.2% compared to a 25.7% gain for the S&P 500. Currently, the industry is trading at an enterprise value-to-EBITDA (EV/EBITDA) ratio of 19.77X, higher than the S&P 500’s 18.87X and the sector’s 11.47X. Elevated inflation and the lingering impacts of COVID-19 and geopolitical tensions continue to exert pressure on margins, while self-help actions are being taken by companies to improve operational efficiencies and cut costs.
Despite these headwinds, Hawkins has seen a projected earnings growth of 15.3% for the current fiscal year, while AdvanSix has a consensus upward revision of 27.3%. Axalta expects earnings growth of 31.8% this year, indicating some resilience within the sector.
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