Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Kraton Offers A Good Story But Some Valuation Questions

Kraton Performance Polymers (NYSE:KRA) is the kind of stock that gives investors early gray hairs. A cyclical, seasonal chemical company with significant raw material risk, the company also has uncommonly high share in its markets. I like the company's history of innovation and product development, not to mention the major synergy potential of the proposed merger with LCY Chemical's SBC business. The cyclicality of the business make discounted cash flow trickier, while reasonable debate on the "right" EV/EBITDA multiple could lead to a fair value between $22 and $32.

A Long-Time Leader In Styrenic Block Copolymers

Formerly part of Shell (NYSE:RDS.A), Kraton played a big role in the invention and development of synthetic rubber -...

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