LSB (LXU) Surges 12.4%: Is This an Indication of Further Gains?

LSB (LXU) shares ended the last trading session 12.4% higher at $8.99. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 2.4% loss over the past four weeks.

Gains from strong selling prices and favorable demand have increased the company’s prospects, contributing to the price rally. Steady exports paired with lower imports have led to tight supply fundamentals. The ammonia market is benefiting as distribution channel inventories are balanced, the Middle-East supply remains disrupted and costs of production remain higher in Europe. Higher volumes of higher margin products and increased selling prices are driving the company’s top line. 

This chemical maker is expected to post quarterly earnings of $0.05 per share in its upcoming report, which represents a year-over-year change of +145.5%. Revenues are expected to be $119.32 million, up 9.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For LSB, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on LXU going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

LSB is a member of the Zacks Chemical - Diversified industry. One other stock in the same industry, DuPont de Nemours (DD), finished the last trading session 1.6% lower at $79.72. DD has returned 5% over the past month.

For DuPont de Nemours, the consensus EPS estimate for the upcoming report has changed -0.2% over the past month to $1.13. This represents a change of -4.2% from what the company reported a year ago. DuPont de Nemours currently has a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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