ESI

Element Solutions Inc

TMT


Presented:01/29/2024
Price:$22.83
Cap:$5.51B
Current Price:$25.67
Cap:$6.22B

Presented

Date01/29/2024
Price$22.83
Market Cap$5.51B
Ent Value$6.46B
P/E Ratio112.69x
Book Value$9.23
Div Yield1.4%
Shares O/S241.52M
Ave Daily Vol1,201,178
Short Int1.86%

Current

Price$25.67
Market Cap$6.22B
Element Solutions, Inc. is a specialty chemicals company. It operates under the Electronics, and Industrial and Specialty segments. The Electronics segment focuses on researching, formulating, and selling specialty chemicals and material process technologies for all types of electronics hardware, from complex printed circuit board designs to advanced semiconductor packaging. The Industrial and Specialty segment includes technologies that enhance surfaces or improve industrial processes in diverse industrial sectors from automotive trim to transcontinental infrastructure and from high-speed printing to high-design faucets. The company was founded by Martin Ellis Franklin on April 23, 2013 and is headquartered in Fort Lauderdale, FL.

Publicly traded companies mentioned herein: Element Solutions Inc (ESI), Entegris Inc (ENTG), Intel Corp (INTC), Taiwan Semiconductor Manufacturing Co Ltd (TSM)

Highlights

The presenter is long shares of Element Solutions Inc (ESI), which makes chemicals and materials that go into the semiconductor and printed circuit board (PCB) manufacturing process. ESI is technically a specialty chemicals company and is covered as such, but he urges investors to think of it like ENTG and expects ENTG analysts will start covering ESI in the next couple years. The company should benefit from secular tailwinds, including the cycle bottoming/inflecting positively and demand for advanced packaging. Management has guided to $2.50 2026 EPS, but the current $23 share price (sub-10x 2026 EPS guidance) is evidence of the market’s skepticism. He is also below management’s $2.50 2026 EPS guidance, forecasting ~$2.25 of EPS. Still, the stock trades at just 10x his 2026 EPS, and he thinks it can rerate in line with other semiconductor businesses as the analyst coverage shifts. Underwriting a 16x – 18x multiple on his $2.25 of EPS, there is upside to $35 – $40 per share.

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Idea Discussion

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