Ferro Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty materials and chemicals manufacturer Ferro Corp. (NYSE: FOE  ) were up 10% in intraday trading as investors reacted to the company's third-quarter earnings report.

So What: While few businesses can truly shrug off the impact of a recession, highly cyclical chemicals and materials manufacturers tend to take a particularly tough gut-shot during downturns. Of course that also means that they often see profits surge when recovery sets in. For Ferro, the third quarter suggested that things are moving in the right direction. Total sales were up 20% year-over-year, while gross profit was up an even stronger 29%.

Now What: Ferro has been limping along for a while, reporting losses as it absorbed costs from restructuring and goodwill impairments. After years of reporting margins that trailed other chemicals and materials manufacturers like RPM International (NYSE: RPM  ) and Cytec (NYSE: CYT  ) , the hope would be that a more cost-efficient company can bring more sales dollars to the bottom line. If the company can hold onto better margins and get a bit of a tailwind from the global economic recovery, it may just be the right time in the cycle to be looking at Ferro's stock.

Interested in more info on Ferro Corp? Add it to your watchlist here by clicking here.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.

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Related Tickers

12/9/2015 8:00 PM
CYT.DL $0.00 Down +0.00 +0.00%
Cytec Industries CAPS Rating: *****
FOE $13.08 Up +0.08 +0.62%
Ferro CAPS Rating: **
RPM $47.89 Up +0.27 +0.57%
RPM International CAPS Rating: *****