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Olin (OLN)
NYSE:OLN

Olin (OLN) AI Stock Analysis

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Olin

(NYSE:OLN)

Rating:58Neutral
Price Target:
$22.00
▲(7.84%Upside)
Olin's overall score reflects a cautious outlook. Financial stability is supported by strong cash flow, yet challenged by declining revenue and high leverage. Corporate events and a mixed earnings call provide some positives, but technical analysis and valuation concerns weigh down the score. The stock may require improvement in profitability and debt management to enhance its attractiveness.
Positive Factors
Capital Allocation
Free cash flow remains strong and will likely be channeled towards buybacks supporting the stock.
Cost Management
Feedstock costs have deflated, supporting margins for Olin Corporation.
Financial Performance
Olin's Q1 results topped estimates largely due to Chlor-alkali EBITDA coming well ahead of expectations, indicating relative stability in chlorine and caustic prices.
Negative Factors
Earnings Expectations
Significant negative earnings revisions are likely with 1Q25 EBITDA guidance well below expectations.
Market Challenges
The outlook for both Epoxy and Winchester segments is disappointing due to soft demand and higher input costs.
Operational Disruptions
OLN will also have to deal with the closure of the Dow PO facility, which will probably cause some disruption in the chlor-alkali markets.

Olin (OLN) vs. SPDR S&P 500 ETF (SPY)

Olin Business Overview & Revenue Model

Company DescriptionOlin Corporation is a leading American manufacturer and distributor of chemical products and ammunition. The company operates in two primary sectors: Chemicals and Ammunition. Its Chemicals segment, known as Olin Chlor Alkali Products and Vinyls, produces chlorine, caustic soda, and other chemical products utilized in various industrial applications. The Ammunition segment, branded as Winchester, is one of the largest ammunition suppliers in the United States, serving commercial, military, and law enforcement markets.
How the Company Makes MoneyOlin Corporation generates revenue primarily through the sale of its chemical products and ammunition. The Chemicals segment, which is a significant portion of Olin's business, makes money by producing and selling chlorine, caustic soda, and other related chemical products. These products are sold to a wide range of industries including paper, textiles, and water treatment facilities. The Ammunition segment generates revenue by manufacturing and selling ammunition products under the Winchester brand. This segment caters to commercial markets, military contracts, and law enforcement agencies. Olin's earnings are also influenced by strategic partnerships and long-term supply agreements, particularly in the chemicals sector, which help stabilize revenue streams and ensure consistent demand for its products.

Olin Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: -4.90%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mix of positive and negative aspects. The Chlor Alkali Products and Vinyls business performed well, and strategic moves in the Winchester division were notable positives. However, challenges in the Epoxy segment and commercial ammunition market posed significant concerns.
Q1-2025 Updates
Positive Updates
Chlor Alkali Products and Vinyls Performance
The Chlor Alkali Products and Vinyls business exceeded expectations due to planned and unplanned industry outages, resulting in increased chlorine and caustic soda volumes. Stable ECU values and positive pricing trends were observed into the second quarter.
Winchester Division Growth
Winchester's domestic and international military ammunition volume continues to grow. A three-year contract extension for operating the Lake City GOCO2 Ammunition facility through 2030 was awarded. The acquisition of AMMO Inc.'s Ammunition assets was completed, expected to be immediately accretive.
Debt Refinancing Success
Olin successfully refinanced its nearest debt tranche, pushing the nearest debt tower out to 2029. This positions the company well to weather the uncertain environment.
Cost Reduction Target Increased
Olin increased its cost reduction target to $50 million to $70 million for full year 2025 related to productivity and structural cost improvements.
Negative Updates
Weakness in Epoxy Business
Epoxy sales improved sequentially but were offset by higher costs. The U.S. and European demand remains weak, with earnings expected to remain negative in the second quarter.
Commercial Ammunition Demand Challenges
Commercial ammunition demand continues to be weak due to retailer destocking and lower consumer sales. Costs for metals are rising, impacting margins.
Company Guidance
During Olin Corporation's first quarter 2025 earnings call, the company provided guidance on several key metrics. Olin increased its annual cost reduction target to $50 million to $70 million, focusing on productivity and structural cost improvements. In the Chlor Alkali Products and Vinyls segment, the company reported stronger-than-expected performance due to supply disruptions, which allowed them to delay their planned Freeport, Texas facility outage. Despite a sequential $33 million higher turnaround expense, Olin expects second-quarter adjusted EBITDA to remain similar to the first quarter, ranging between $170 million and $210 million. In the Epoxy segment, Olin anticipates continued challenges due to higher costs and global capacity overhang, with the second quarter expected to include a $10 million sequential headwind from a planned maintenance turnaround. For Winchester, military ammunition sales are growing, but commercial sales remain weak, with the company facing cost pressures from rising metal prices. Despite these challenges, Olin's recent acquisition of AMMO Inc.'s assets is expected to be immediately accretive, supporting Winchester's growth strategy. Olin also successfully refinanced its nearest debt tranche, pushing the nearest debt tower out to 2029, enhancing its financial resiliency amidst economic uncertainties.

Olin Financial Statement Overview

Summary
Olin exhibits a mixed financial performance. The income statement reveals profitability challenges and declining revenue, while the balance sheet shows high leverage. However, strong cash flow generation is a positive aspect, indicating financial resilience despite the need to address revenue decline and leverage.
Income Statement
68
Positive
Olin shows a mixed performance in the income statement. The TTM Gross Profit Margin is healthy at 33.13%, indicating efficient cost management relative to revenue. However, the Net Profit Margin for the TTM is low at 0.94%, reflecting challenges in converting revenue into profit. Revenue has declined over the years, with a significant drop of 30.16% from 2022 to 2023, highlighting a concerning trend in revenue growth. The EBIT and EBITDA margins are moderate at 3.88% and 10.06% respectively, suggesting some operational efficiency but also room for improvement.
Balance Sheet
62
Positive
The balance sheet reveals a relatively high Debt-to-Equity ratio of 1.60, which could imply higher financial risk due to significant leverage. The Return on Equity for the TTM is notably low at 3.01%, indicating a modest return on shareholders' investments. The equity ratio stands at 26.62%, suggesting a moderate level of financial stability. While there are strengths, such as a stable asset base, the high leverage remains a key concern.
Cash Flow
72
Positive
Olin's cash flow statement reflects a solid cash generation capability. The Operating Cash Flow to Net Income ratio is robust at 6.88 for the TTM, indicating strong cash flow relative to net income. However, the Free Cash Flow has decreased, with a decline of 37.77% from the previous year. The Free Cash Flow to Net Income ratio stands at 3.12, showing that the company is generating sufficient cash flow, albeit with some reductions over time. Overall, cash flow stability is a positive aspect of Olin's financials.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
6.55B6.54B6.83B9.38B8.91B5.76B
Gross Profit
2.17B737.50M1.16B2.18B2.29B383.40M
EBIT
254.40M296.50M712.10M1.78B1.85B-18.50M
EBITDA
659.30M844.30M1.30B2.44B2.32B-142.50M
Net Income Common Stockholders
61.40M108.60M460.20M1.33B1.30B-969.90M
Balance SheetCash, Cash Equivalents and Short-Term Investments
150.90M175.60M170.30M194.00M180.50M189.70M
Total Assets
7.61B7.58B7.71B8.04B8.52B8.27B
Total Debt
3.11B3.15B3.02B2.94B3.16B4.23B
Net Debt
2.96B2.97B2.85B2.75B2.98B4.04B
Total Liabilities
5.40B5.52B5.44B5.50B5.87B6.82B
Stockholders Equity
2.17B2.02B2.23B2.54B2.65B1.45B
Cash FlowFree Cash Flow
191.80M308.10M738.30M1.69B1.54B119.50M
Operating Cash Flow
422.20M503.20M974.30M1.92B1.74B418.40M
Investing Cash Flow
-271.40M-283.70M-340.80M-259.70M-197.40M-835.70M
Financing Cash Flow
-40.70M-212.60M-656.90M-1.65B-1.55B385.60M

Olin Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price20.40
Price Trends
50DMA
21.78
Negative
100DMA
25.13
Negative
200DMA
33.34
Negative
Market Momentum
MACD
-0.50
Positive
RSI
45.72
Neutral
STOCH
18.76
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OLN, the sentiment is Neutral. The current price of 20.4 is below the 20-day moving average (MA) of 20.95, below the 50-day MA of 21.78, and below the 200-day MA of 33.34, indicating a bearish trend. The MACD of -0.50 indicates Positive momentum. The RSI at 45.72 is Neutral, neither overbought nor oversold. The STOCH value of 18.76 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for OLN.

Olin Risk Analysis

Olin disclosed 26 risk factors in its most recent earnings report. Olin reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Olin Peers Comparison

Overall Rating
UnderperformOutperform
Sector (50)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
73
Outperform
$2.67B31.9019.47%0.54%6.01%12.38%
72
Outperform
$3.41B34.474.32%2.94%3.58%-5.17%
66
Neutral
$2.19B82.982.21%1.81%-7.91%-81.73%
OLOLN
58
Neutral
$2.23B38.132.94%4.13%-1.13%-81.74%
SSSSL
53
Neutral
$2.91B-28.05%2.00%-4.31%-1421.83%
50
Neutral
$2.00B-1.13-21.16%3.71%2.15%-30.95%
ASASH
44
Neutral
$2.25B21.03-3.02%3.29%-7.63%-157.37%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
OLN
Olin
20.40
-31.94
-61.02%
ASH
Ashland
50.77
-47.32
-48.24%
HWKN
Hawkins
133.55
46.43
53.29%
IOSP
Innospec
87.85
-38.55
-30.50%
AVNT
Avient
37.28
-6.27
-14.40%
SSL
Sasol
4.56
-2.43
-34.76%

Olin Corporate Events

Executive/Board ChangesShareholder MeetingsDividendsBusiness Operations and StrategyFinancial Disclosures
Olin Corporation Holds Annual Shareholder Meeting
Neutral
May 1, 2025

On May 1, 2025, Olin Corporation held its annual meeting of shareholders, where the board approved a reduction in its size from ten to nine directors following the completion of Mr. C. Robert Bunch’s term. Shareholders elected nine directors, approved executive compensation, and ratified KPMG LLP as the independent auditor for 2025. Olin also declared a quarterly dividend of $0.20 per share, marking its 394th consecutive quarterly dividend. In its first quarter 2025 financial results, Olin reported a net income of $1.4 million, a significant decrease from the previous year, with adjusted EBITDA of $185.6 million. The company experienced higher chlorine demand, leading to a delay in planned maintenance, and announced cost-saving measures and reduced capital spending. Despite challenges in the epoxy market and Winchester sales, Olin remains focused on a value-first approach and expects stable performance in its chemical businesses.

Private Placements and FinancingBusiness Operations and Strategy
Olin Corporation Issues Senior Notes and Refinances Credit
Positive
Mar 14, 2025

On March 14, 2025, Olin Corporation issued $600 million in 6.625% Senior Notes due in 2033, with provisions for early redemption and potential subsidiary guarantees. Concurrently, Olin refinanced its senior unsecured Credit Agreement, establishing a $650 million term loan and a $1.2 billion revolving credit facility, both maturing in 2030. These financial maneuvers aim to strengthen Olin’s capital structure and provide flexibility for future corporate needs.

Private Placements and FinancingBusiness Operations and Strategy
Olin Announces $600 Million Senior Notes Offering
Neutral
Feb 28, 2025

On February 28, 2025, Olin Corporation announced the pricing of its private offering of $600 million in senior notes due 2033, with a 6.625% interest rate. The offering is expected to close on March 14, 2025, and the proceeds will be used for refinancing transactions, including redeeming existing senior notes and refinancing credit facilities. This move is part of Olin’s strategy to manage its debt and improve financial flexibility, though the offering is subject to customary closing conditions and market conditions.

Private Placements and FinancingBusiness Operations and Strategy
Olin Announces $600 Million Senior Notes Offering
Neutral
Feb 28, 2025

On February 28, 2025, Olin Corporation announced its intention to offer $600 million in senior notes due 2033, as part of a strategy to refinance existing debt and replace its current credit facilities. The proceeds from this offering, along with new credit facilities, will be used to redeem and refinance existing notes and credit facilities, aiming to streamline its financial obligations. This move is not contingent on the closing of the new credit facilities and reflects Olin’s efforts to optimize its financial structure amid prevailing market conditions.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.