Kronos Worldwide (KRO) Shares Surge 60% in 6 Months: Here's Why

Zacks Equity Research

11 June 2024 at 8:17 am·3-min read

Kronos Worldwide, Inc.’s KRO shares have popped 59.7% over the past six months. The rally has resulted in the stock outperforming its industry’s rise of 7% over the same time frame. It has also topped the S&P 500’s roughly 16.1% rise over the same period.

Let’s dive into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.

Image Source: Zacks Investment Research

What’s Driving KRO?

Better-than-expected earnings performance in the first quarter and an upbeat outlook have contributed to the run-up in the company's shares. Kronos Worldwide’s earnings of 7 cents per share for the first quarter topped the Zacks Consensus Estimate of 4 cents.

Net sales rose around 12% year over year to $478.8 million on higher sales volumes driven by stronger demand for titanium dioxide (TiO2) in major markets. It also surpassed the Zacks Consensus Estimate of $454.6 million.

KRO is well-placed to gain from higher demand for TiO2. Per the company, TiO2 consumption has increased at a compound annual growth rate of around 2% since 2000. Western Europe and North America account for roughly 14% and 15% of global TiO2 consumption, respectively. These regions are expected to continue to be the biggest consumers of TiO2. Moreover, markets for TiO2 are growing in South America, Eastern Europe, the Asia Pacific region and China.

The company expects sales volumes in 2024 to exceed 2023 levels factoring in the recently experienced improved demand and expectations that demand will continue to improve this year.

Kronos has increased its production rates in sync with current and expected near-term demand improvement. It expects its production rates for the balance of 2024 to be higher than the level witnessed in 2023.

KRO also envisions reduced energy costs along with its cost-cutting initiatives and the realization of selling price increases to result in improved margins on a year-over-year basis in 2024. It expects to report higher operating results on a year-over-year basis for full-year 2024 based on the expected improved demand, higher selling prices and reduced production costs.

Earnings estimates for Kronos have also been going up over the past two months, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2024 has shot up around 157.6%. The consensus estimate for second-quarter 2024 has also been revised roughly 175% upward over the same time frame.

The Zacks Consensus Estimate for earnings for 2024 for Kronos is currently pegged at 85 cents, reflecting an expected year-over-year growth of 297.7%. Moreover, earnings are expected to register a 414.3% growth in second-quarter 2024.

Kronos Worldwide Inc Price and Consensus

Kronos Worldwide Inc price-consensus-chart | Kronos Worldwide Inc Quote

Stocks to Consider

Other top-ranked stocks in the basic materials space include Axalta Coating Systems Ltd. AXTA, Carpenter Technology Corporation CRS and ATI Inc. ATI.

Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 15.1%. The company’s shares have soared roughly 102% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Axalta Coating Systems, carrying a Zacks Rank #1, has a projected earnings growth rate of 26.8% for the current year. In the past 60 days, the consensus estimate for AXTA's current-year earnings has been revised upward by 5.9%. The company’s shares have gained roughly 13% in the past year.

ATI currently carries a Zacks Rank #2. ATI beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 8.3%. The company’s shares have rallied around 46% in the past year.

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What’s Driving KRO?

Kronos Worldwide Inc Price and Consensus

Stocks to Consider

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