HUN: Bearish Signals for Huntsman Corporation. Time to Buy Puts?

Huntsman is a global manufacturer of diversified organic chemical products operating in three segments: Polyurethanes, Performance Products, and Advanced Materials. The Polyurethanes segment focuses on 'MDI' products, polyols, and 'TPU', used in rigid and flexible foams, coatings, adhesives, and elastomers, targeting building insulation, automotive, and footwear markets. The Performance Products segment produces amines and maleic anhydride, used in fuel additives, coatings, and construction materials, serving customers like Afton and BASF. The Advanced Materials segment provides technologically advanced epoxy, phenoxy, acrylic, polyurethane, and acrylonitrile-butadiene-based polymer formulations under brands like 'ARALDITE', 'EPIBOND', and 'URALANE', targeting aerospace, automotive, and electrical infrastructure markets. Huntsman differentiates itself through its broad product offering, complex chemistry expertise, long-standing customer relationships, and ability to develop and adapt technology for new markets and applications.

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HUN's technical outlook is decidedly bearish. The stock price has experienced a significant downtrend over the past 90 days, declining from approximately $11.58 in late July to $7.875 as of November 4th. The price is currently below its 21-day EMA of $8.66 and both its 50-day ($9.53) and 200-day ($12.22) SMAs, confirming the downtrend. Momentum indicators also reflect weakness; the RSI is at 37.48, indicating oversold conditions but also persistent selling pressure. The MACD is negative (-0.27), further reinforcing the bearish sentiment. The STOCHk is at 20.36, which is low, but could indicate oversold conditions; however, without other confirming indicators, it is not a strong buy signal. ADX is at 23.03, suggesting a defined trend. The ROC20 is at -14.70, confirming the downward price movement. Given these factors, the stock is likely to continue its downward trajectory over the next 1-3 months.

Huntsman Corporation's MD&A reveals a challenging operational landscape. `Net Sales` for the three months ended June 30, 2025, decreased by 7% to $1,458 million, primarily due to lower average selling prices and reduced sales volumes across all segments. The `Gross Profit` margin also contracted, falling from 15.4% ($243 million/$1,574 million) in the prior year to 12.5% ($182 million/$1,458 million) in the current quarter. This decline is attributed to reduced gross profits in all segments. For the six months ended June 30, 2025, `Net cash provided by operating activities from continuing operations` was $21 million, compared to -$8 million in the same period of 2024. Despite this improvement in operating cash flow, the company is facing headwinds. The decrease in revenues in our Polyurethanes segment for the three months ended June 30, 2025 compared to the same period of 2024 was primarily due to lower average selling prices and lower sales volumes. MDI average selling prices decreased primarily due to less favorable supply and demand dynamics. Sales volumes decreased primarily due to lower demand in construction-related markets and the scheduled turnaround at our Rotterdam, the Netherlands manufacturing facility during the second quarter of 2025. Furthermore, restructuring, impairment, and plant closing costs significantly increased by $120 million for the three months ended June 30, 2025, compared to the prior year, impacting profitability.

Huntsman's Q2 2025 earnings call reveals a cautiously pessimistic outlook. While results met expectations, CEO Peter Huntsman acknowledged the 'disappointing sluggishness of construction activity and tariff uncertainty, especially in polyurethanes.' He characterized the current macro environment as one where they see 'neither reason to panic nor to be overly optimistic.' The company is prioritizing balance sheet management, focusing on cost structure and prudent capital spending. Inventory reductions negatively impacted EBITDA by $25 million in Q2, which was offset by reduced bonus accruals. While Advanced Materials showed a 'nice rebound,' the polyurethanes segment faces challenges, particularly in Europe, where management sees 'people are putting volume over value and they're moving volume at any price sort of a thing.' The company is also closely monitoring the dividend, indicating potential adjustments based on future earnings and market conditions. Overall, the call suggests a defensive posture, with a focus on cost control and navigating ongoing market uncertainties, leaning towards a mildly bearish sentiment.

HUN's financial performance presents a concerning trajectory. Revenue has fluctuated, starting at $1470M in Q1 2024, peaking at $1574M in Q2 2024, and landing at $1458M in Q2 2025, indicating inconsistent top-line growth. Profitability is a significant worry, with the gross profit ratio declining from 0.1367 in Q1 2024 to 0.1248 in Q2 2025. The company's operating cash flow demonstrates volatility, with -$65M in Q1 2024 and a more recent positive $92M in Q2 2025; however, the net income for the same period is a loss of $158M, suggesting that cash flow generation is not stemming from core profitability. Furthermore, HUN's solvency is under pressure, as total debt has decreased from $2486M in Q1 2024 to $2035M in Q2 2025. Despite some improvements in operating cash flow and debt management, the negative net income and fluctuating revenue trends raise concerns about HUN's overall financial health and its ability to sustain long-term growth. The negative income before tax ratio of -0.095 in Q2 2025 is also a notable red flag.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.