Olin Stock To $18?

Olin (OLN) stock has jumped 6.1% during the past day, and is currently trading at $25.37. Our multi-factor assessment suggests that it may be time to sell OLN stock. We have, overall, a pessimistic view of the stock, and a price of $18 may not be out of reach. We believe there is a lot to fear in OLN stock given its overall Very Weak operating performance and financial condition. Hence, despite its Very Low valuation, we think that the stock is Unattractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $2.9 Bil in market cap, Olin provides chemical products globally through Chlor Alkali, Epoxy materials, and sporting ammunition for hunters, recreational shooters, and law enforcement agencies.

[1] Valuation Looks Very Low

This table highlights how OLN is valued vs broader market. For more details see: OLN Valuation Ratios

[2] Growth Is Very Weak

• Olin has seen its top line shrink at an average rate of -9.2% over the last 3 years
• Its revenues have grown 3.7% from $6.5 Bil to $6.8 Bil in the last 12 months
• Also, its quarterly revenues declined -0.4% to $1.7 Bil in the most recent quarter from $1.7 Bil a year ago.

This table highlights how OLN is growing vs broader market. For more details see: OLN Revenue Comparison

[3] Profitability Appears Very Weak

• OLN last 12 month operating income was $39 Mil representing operating margin of 0.6%
• With cash flow margin of 7.0%, it generated nearly $474 Mil in operating cash flow over this period
• For the same period, OLN generated nearly $-101 Mil in net income, suggesting net margin of about -1.5%

This table highlights how OLN profitability vs broader market. For more details see: OLN Operating Income Comparison

[4] Financial Stability Looks Weak

• OLN Debt was $3.1 Bil at the end of the most recent quarter, while its current Market Cap is $2.9 Bil. This implies Debt-to-Equity Ratio of 108.9%
• OLN Cash (including cash equivalents) makes up $168 Mil of $7.3 Bil in total Assets. This yields a Cash-to-Assets Ratio of 2.3%

[5] Downturn Resilience Is Very Weak

OLN has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• OLN stock fell 36.9% from a high of $66.92 on 2 June 2022 to $42.21 on 29 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $64.59 on 31 January 2023 , and currently trades at $25.37

 
2020 Covid Pandemic

• OLN stock fell 51.0% from a high of $19.06 on 21 February 2020 to $9.34 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 5 November 2020

 
2008 Global Financial Crisis

• OLN stock fell 70.0% from a high of $30.14 on 30 July 2008 to $9.05 on 5 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 4 March 2015

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read OLN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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