On Apr 15, Zacks Investment Research upgraded U.S. Silica Holdings, Inc. (SLCA- Free Report) , a leading producer of commercial silica, to a Zacks Rank #1 (Strong Buy). Going by the Zacks model, companies sporting a Zacks Rank #1 have strong chances of outperforming the broader market.
Why the Upgrade?
Estimates for U.S. Silica have been moving north over the past 60 days. The Zacks Consensus Estimate for the first quarter of 2017 has increased from break even per share to 6 cents per share over this period. Moreover, the Zacks Consensus Estimate for 2017 has moved up 88% over the same timeframe to $1.28.
U.S. Silica also has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of 24.95%.
Moreover, U.S. Silica has significantly outperformed the Zacks categorized Mining – Miscellaneous industry over a year, partly owing to its cost reduction and operational efficiency improvement measures. The company’s shares gained around 90.2% over this period, compared with roughly 27.6% gain recorded by the industry.
U.S. Silica’s healthy balance sheet provides it with ample opportunities for making strategic investments that will ensure its long-term competitive position in the market. The company’s decision to raise capital enhanced its financial flexibility and reinforced its balance sheet.
The company is executing many cost improvement projects throughout its supply chain. Moreover, it remains focused on preserving capital by giving priority to critical maintenance projects and is also boosting its market position.
As part of its investment strategy, U.S. Silica purchased the NBR Sand unit of New Birmingham Inc., a privately-owned industrial minerals and logistics company which allows the company to expand its product offering and capacity in the regional sands market, and enhance customer satisfaction. The company is optimistic about the growth of the regional sand market and is looking to create a strong foothold in the same.
U.S. Silica has also acquired logistics solutions provider, Sandbox Enterprises LLC. This acquisition will allow the company to offer its customers significantly improved transportation and operating efficiencies and meaningful cost savings relative to the existing delivery systems. The acquisition is also expected to deliver earnings accretion of between 20 cents and 30 cents per share in 2017.
The company also recently purchased a unit of National Coatings Corp. that makes and markets cool roof granules used in industrial roofing systems. The acquisition has allowed U.S. Silica to enter into a new and growing market and expand its offerings under its new product development initiative.
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