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Several macroeconomic challenges may limit the chemical industry’s growth trajectory. Against this scenario, chemical stocks with weaker fundamentals, Danimer Scientific (DNMR) and Gevo (GEVO), are best avoided for now. read….
Supply chain issues, coupled with macroeconomic uncertainties, may hamper the growth of the chemical industry. Against this background, Danmar Scientific, a chemical stock with weak fundamentals (DNMR) and Gevo, Inc. (GEVO), which can be avoided for the reasons given in the article.
Since the pandemic, the chemical industry has improved significantly with a surge in demand, but a detrimental combination of economic headwinds has hit the industry. First, supply chain constraints and freight forwarding issues have greatly plagued the industry.
according to American Chemistry Council (ACC), 93% of companies We believe supply chain and freight disruptions are impacting the US chemical manufacturing business. In a press release announcing the findings, ACC economist Emily Sanchez said, “There are signs that things are improving, but the transportation problems plaguing our members are far from over.”
moreover, ManufacturingISM® Business report, Chemical industry activity continues to decline Until March. New orders and new exports fell while production and employment fell in he March. Furthermore, the International Monetary Fund (IMF) forecasts that global economic slowdownthe chemical industry may face reduced demand.
Against this background, the fundamentally weak and beaten chemical strains DNMR and GEVO are best avoided for now.
Danimer Scientific (DNMR)
DNMR is a high-performance polymer company that develops, manufactures and delivers bioplastics to replace traditional petroleum-based plastics. The company offers products for biopolymers and sells to consumer packaging brand owners, converters and manufacturers in the plastics industry.
DNMR’s 12-month ROTC of -10.48% compares to the industry average of 6.89%. Similarly, the 12-month EBIT and EBITDA margins were negative 232.89% and 194.46%, respectively, compared to industry averages of 12.60% and 19.03%.
DNMR forward EV/Sales and Price/Sales of 7.18x and 4.52x are 378.3% and 295.3% higher than industry averages of 1.50x and 1.14x respectively.
In the fourth quarter ended December 31, DNMR’s total revenue decreased 13.6% year-over-year to $15.32 million. Operating loss for the quarter was $29.72 million..DNMR net loss Net loss per share increased 125.4% and 133.3% year-over-year to $28.05 million and $0.28, respectively.
Analysts expect DNMR’s EPS to decline 3.4% year-over-year to negative $1.26 for the fiscal year ending December 2023. Revenue for the same period is expected to be $94.37 million. Additionally, DNMR failed to exceed the consensus EPS estimate in each of the four subsequent quarters.
The stock has fallen 22% over the past year, closing its last trading session at $4.18.
The dark fundamentals of DNMR are POWR ratingThe stock has an overall rating of F, which translates to a strong sell in its own rating system. POWR Ratings evaluate stocks by 118 individual factors, each with its own weighting.
DNMR is also rated F for Stability, Emotion and Quality and D for Value. It is the lowest of 83 stocks chemicals industry.
Beyond the above, we can see additional POWR ratings for DNMR growth and momentum. here.
Gebo Co., Ltd. (GEVO)
GEVO operates as a renewable fuel company through four segments. agricultural energy; renewable natural gas; and net zero. GEVO commercializes gasoline, jet fuel and diesel fuel to achieve zero carbon emissions and reduce greenhouse gas emissions.
In terms of ROCE over the last 12 months, GEVO’s minus 17% compares to the industry average of 21.44%. Similarly, ROTC and ROTA over the last 12 months are -7.49% and -13%, respectively, compared to industry averages of 9.91% and 7.09%.
GEVO’s forward price/sales of 29.44x is significantly higher than the industry average of 1.33x.
In the fourth quarter of the fiscal year ended December 31, 2022, GEVO’s operating loss increased 63.5% year-on-year to $26.95 million, and the total loss for the quarter was $24.26 million, down 44.1% year-on-year Increased. Non-GAAP adjusted net loss per share increased 37.5% year-over-year to $0.11.
Analysts expect GEVO’s EPS to decline 33.3% year-over-year to minus $0.08 in the second quarter of its fiscal year ending June 2023. Revenue for the quarter is expected to be $561,000. What’s more, he has failed to beat consensus earnings estimates in three of his four quarters since.
The stock has fallen 73.6% over the past year and 40.9% over the past six months, closing the last trading session at $1.26.
GEVO’s poor outlook is reflected in its POWR rating. The stock has an overall rating of F, which translates to a strong sell in its own rating system.
GEVO is rated F for Value, Quality and Stability and D for Sentiment. Ranked 82nd in the same industry.
click here Get GEVO’s POWR rating for Growth and Momentum.
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DNMR shares were trading at $4.14 a share on Friday morning, down $0.04 (-0.96%). Year-to-date, the DNMR is up 131.28% for him, while the S&P 500 index benchmark is up 8.21% for him over the same period.
About the Author: Srithi Suman Jayaswar
As a student, he became interested in stock market dynamics and became a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. With her master’s degree in Accounting and Finance, Sristi hopes to deepen her experience in investment research and better guide investors.
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