CARBO Ceramics: Difficult Outlook For Ceramic Proppant Margins
- CARBO’s revised outlook for the third quarter is a reflection of adverse fundamental trends in the market for “traditional” ceramic proppants.
- Competitive pressures may persist and are unlikely to be resolved unless a significant price drop produces a structural change in the segment.
- CARBO remains a technological leader in the advanced proppants segment and is differentiated by product quality, customer recognition and a pipeline of innovative products.
- The company has no debt and is generating free cash flow.
- After the stock’s re-pricing, the share price more reasonably reflects the fundamental outlook, although additional downside risk remains.