Olin (OLN) Surges 5.8%: Is This an Indication of Further Gains?

Olin (OLN) shares rallied 5.8% in the last trading session to close at $23.86. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 1.1% gain over the past four weeks.

OLN’s gain appears to reflect a recovery in its shares from the initial shock after it lowered its fourth-quarter EBITDA outlook, citing a shortfall in its Chlor Alkali Products and Vinyls segment. This shortfall had stemmed from issues at its Freeport, TX, facility, including an extended planned maintenance turnaround, unplanned downtime, and a lower-than-anticipated demand for pipeline chlorine, which pressured the segment’s performance in the quarter. However, the company noted that the Freeport site has since returned to normal operations, easing the pressure. The management remains focused on safe operations, cost reduction initiatives, and a disciplined value-first commercial approach.

This chlor-alkali and ammunition producer' is expected to post quarterly loss of $0.28 per share in its upcoming report, which represents a year-over-year change of -411.1%. Revenues are expected to be $1.62 billion, down 3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Olin, 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 OLN 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 >>>>

Olin is part of the Zacks Chemical - Diversified industry. Albemarle (ALB), another stock in the same industry, closed the last trading session 1.9% higher at $161.29. ALB has returned 17.6% in the past month.

Albemarle's consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.61. Compared to the company's year-ago EPS, this represents a change of +44%. Albemarle currently boasts a Zacks Rank of #3 (Hold).

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

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