• Skip to primary navigation
  • Skip to main content
Global Value Investment Corp.
  • About Us
    • Firm Overview
    • How We Invest
    • Our Team
  • Services
    • Advisory
      • Milwaukee Institutional Asset Management
      • Milwaukee Private Wealth Management
      • Global Value Partners
    • Research
  • Investment Strategies
    • Total Return Value Strategy
    • Concentrated Equity Value Strategy
    • Focused Fixed Income Value Strategy
    • Special Purpose Vehicles
  • News and Views
    • Papers and Publications
    • Client Letters
    • Research Notes
    • Press Releases
    • Investment Research
  • Contact Us
  • Client Portal

LXU: Operational Improvements and Firming Prices Produce Strong Results

March 11, 2019

  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
  • Share via Email

LSB Industries, Inc. (“LSB”) reported financial results for the quarter ended December 31, 2018 (FQ4 2018) reflecting robust revenue growth primarily attributable to favorable increases in product prices as issues that have weighed on the industry for the past few years continue to dissipate. Successful efforts to grow revenue organically are evident in the industrial and mining segments, although a weak fall fertilizer application hampered volumes in the agriculture segment. LSB’s three owned production facilities boasted strong on-stream rates, a testament to the efficacy of changes to plant operations and maintenance procedures that have been the focus of management’s efforts for the past few years.  Global Value Research Company (GVRC) believes that LSB’s improved plant operations coupled with firm product pricing and several ongoing corporate initiatives are reasons for optimism. While there remains much work to be done, profitability appears within reach. The company’s valuation on the basis of both its tangible book value (TBV) and a range of earnings-based measurements are attractive relative to the current stock price of $6.52. While the company’s long-term value lies in its ability to produce attractive and consistent cash flow, GVRC assesses LSB’s TBV of approximately $10.65 as a conservative valuation metric providing an ample margin of safety until the company is able to produce consistent earnings. GVRC applies a modest 1.25x multiple to TBV to arrive at a target price of $13.30, and notes the substantial upside represented by an expectation of future earnings improvements.

LSB Industries, Inc. Research Report – March 11, 2019

Privacy Policy   ·   ADV   ·   © 2023 Global Value Investment Corp.