In this regular recurring report, we do a more in-depth analysis of one of the several thousand companies we follow. In this report we report on A Schulman Incorporated (SHLM).
A Schulman Incorporated (SHLM) is a supplier of plastic compounds and resins. SHLM is in many different types of markets, including industrial, automotive, consumer products, and packaging. SHLM operates mainly in four lines of business: masterbatch, engineered products, rotomolding, and distribution.
The company is headquartered in Akron, Ohio. It has a worldwide business presence. It conducts business in North America, Europe, the Middle East, Africa and Asia (Pacific).
SHLM’s operating performance over the past seven to eight years has actually been pretty good. Its sales have been relatively strong and steady. It has consistently paid (and even increased) its dividend over the last business cycle. And it does not score poorly on the other metrics we look that reveal a firm’s operating efficiency.
Our greatest problems with SHLM are these. It has taken out a great deal of debt to fund its latest acquisitions. Its leverage ratio is now above its long-term average and it is above what we consider prudent or optimal. It has weakened its balance sheet in other ways. In the face of a slowing economy, this move could prove very painful.
Additionally, SHLM is no longer cheap. Its price-to-sales ratio is modest. But on most other multiples, it is richly priced. And when these ratios are put in relative, SHLM looks even more expensive.
On balance, we feel that SHLM’s overall fundamentals are below average. And we would not consider it one of the best stocks to buy now.
Stat Sheet – A Schulman Incorporated 4/28/16
|Industry||Chemicals – Plastics & Rubber|
|Market Cap||$ 816|
|Financial Strength||Below Average|
|Growth Prospects||Below Average|
(Our assessment of this firm’s fundamentals will be in effect for the rest of calendar year 2016.)
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