Schulman (SHLM) Beats Street Estimates But Difficult Economic Environment Warrants Cautious Approach

A.Schulman (NASDAQ: SHLM) announced EPS of $0.76 beating street estimates of $0.43, aided by lower raw material costs and lower tax rate.

Sidoti & Company believes that the management is slowly moving Schulman in the right direction by focusing on specialized products and shifting away from the automotive sector. Reflecting better than expected results, the EPS estimates have been raised to $1.66 (from $1.18) for F2010, but due to a tough economic environment, expected softer sales volumes and lower gross margins (due to higher raw material costs), Sidoti & Company has maintained its ‘Neutral’ call on the company, citing a possible revision in the target price ($21) on a faster than expected rebound in the US plastics market.