Kronos Worldwide Inc (NYSE: KRO)

Sector: Basic Materials Industry: Specialty Chemicals CIK: 0001257640
Market Cap 570.25 Mn
P/B 0.74
P/E 3.85
P/S 0.37
ROIC (Qtr) 4.84
Div Yield % 15.07
Rev 1y % (Qtr) -5.74
Total Debt (Qtr) 642.70 Mn
Debt/Equity (Qtr) 0.80

About

Kronos Worldwide Inc., often recognized by its stock symbol KRO, is a prominent player in the industrial sector, specializing in the production and marketing of value-added titanium dioxide (TiO2) pigments. These pigments are integral to a wide range of applications, including coatings, plastics, paper, and other specialized uses. The company was established in Delaware in 1989 and is publicly traded on the New York Stock Exchange under the ticker symbol KRO. Kronos Worldwide's primary business activities revolve around the production and sale...

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 1.91B provides 2.97x coverage of total debt 642.70M, indicating robust asset backing and low credit risk.
  • Operating cash flow of (40.30M) provides strong 11.51x coverage of operating expenses (3.50M), showing operational efficiency.
  • Tangible assets of 1.91B provide robust 366.75x coverage of other current liabilities 5.20M, indicating strong asset backing.
  • Free cash flow of (85.30M) provides excellent 3.71x coverage of dividends (23M), indicating sustainable shareholder returns.
  • Free cash flow of (85.30M) provides solid 24.37x coverage of operating expenses (3.50M), showing operational efficiency.

Bear case

  • With cash reserves of 36.40M against inventory of 659.10M, the 0.06 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of (40.30M) provides thin coverage of dividend payments of (23M) with a 1.75 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of (40.30M) provides minimal -0.84x coverage of tax expenses of 47.70M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of (85.30M) provides weak coverage of capital expenditures of 45M, with a -1.90 ratio suggesting additional external financing needs for growth initiatives.
  • Free cash flow of (85.30M) represents just -1.95x of debt issuance 43.70M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Statement Scenario Breakdown of Revenue (2024)

Statement Scenario Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Chemicals
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LIN Linde Plc 218.63 Bn 38.41 6.61 25.93 Bn
2 SHW Sherwin Williams Co 110.34 Bn 170.54 11.54 13.58 Bn
3 ECL Ecolab Inc. 80.35 Bn 80.18 5.93 8.67 Bn
4 APD Air Products & Chemicals, Inc. 56.37 Bn 48.29 5.86 18.31 Bn
5 PPG Ppg Industries Inc 34.00 Bn 31.05 2.58 7.91 Bn
6 LYB LyondellBasell Industries N.V. 17.46 Bn 5.03 0.49 13.22 Bn
7 DD DuPont de Nemours, Inc. 16.63 Bn 3.65 0.32 8.90 Bn
8 ALB Albemarle Corp 14.44 Bn 48.94 6.36 3.63 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.42 1.52
EV to Cash from Ops. EV/CFO 4.92 12.52
EV to Debt EV to Debt 1.25 13.65
EV to EBIT EV/EBIT 3.11 21.45
EV to EBITDA EV/EBITDA 2.70 14.82
EV to Free Cash Flow [EV/FCF] EV/FCF 6.65 29.24
EV to Market Cap EV to Market Cap 1.41 3.84
EV to Revenue EV/Rev 0.52 89.11
Price to Book Value [P/B] P/B 0.74 5.48
Price to Earnings [P/E] P/E 3.85 16.02
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -1.80 -5.31
Dividend Payout Ratio % Div Payout % (Qtr) -57.10 -75.74
Dividend per Basic Share Div per Share (Qtr) 0.20 1.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -26.95 23.50
Interest Coverage Int. cover (Qtr) 1.13 -8.92
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -100.00 -1.67
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -64.63 72.99
Dividend Growth (1y) % Div 1y % (Qtr) -67.74 -3.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -405.03 -31.21
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -21.79 51.49
EBIT Growth (1y) % EBIT 1y % (Qtr) -64.33 0.57
EBT Growth (1y) % EBT 1y % (Qtr) -94.87 -80.35
EPS Growth (1y) % EPS 1y % (Qtr) -143.21 -90.82
FCF Growth (1y) % FCF 1y % (Qtr) -231.03 -50.40
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -7.76 219.02
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.98 0.70
Cash Payout Ratio Cash Payout (Qtr) 4.89 0.41
Cash Ratio Cash Ratio (Qtr) 0.13 1.28
Current Ratio Curr Ratio (Qtr) 3.83 3.42
Debt to Equity Ratio Debt/Equity (Qtr) 0.80 0.92
Interest Cover Ratio Int Coverage (Qtr) 1.13 -8.92
Times Interest Earned Times Interest Earned (Qtr) 1.13 -8.92
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 6.40 -333.97
EBIT Margin % EBIT Margin % (Qtr) 3.06 -374.34
EBT Margin % EBT Margin % (Qtr) 0.34 -379.75
Gross Margin % Gross Margin % (Qtr) 16.30 29.26
Net Profit Margin % Net Margin % (Qtr) -2.20 -380.67