Olin (OLN) Could Be 25% Undervalued If Cost Cuts Lift Margins
Recent trading in Olin (OLN) has drawn fresh attention after the share price moved around $17 and declined over the past month and past 3 months, sharpening the debate around its valuation.
Olin’s recent softness fits into a wider losing streak, with the share price around $16.84 and the 30 day share price return down 8.48%, while the 1 year total shareholder return has declined 27.70% and the 5 year total shareholder return is down 61.77%. This points to fading momentum and a market that has steadily priced in higher perceived risk around the story.
Scan the chemicals space for beaten down but financially solid names by starting with our curated list of list of solid balance sheet and fundamentals (23 results), which echo parts of the Olin story.
Olin still runs a sizable, diversified chemicals and ammunition operation, yet the share price slide tells a very different story. Is a solid underlying business now on offer at a fair valuation, or not?
Most Popular Narrative: 25% Undervalued
On the most followed valuation narrative, Olin screens as cheaper than its modeled fair value of about $22.38 when set against the last close near $16.84, which puts the focus firmly on whether the business can deliver the earnings path baked into that estimate.
Structural cost reduction initiatives (Beyond250 and Epoxy cost optimization) are expected to deliver significant operational savings, yielding an estimated $70–90 million run-rate benefit by the end of 2025 and additional structural cost reductions from the Stade, Germany facility in 2026; this is anticipated to improve net margins and boost earnings quality.
See why 16 investors see Olin as 25% undervalued.
Result: Fair Value of $22.38 (UNDERVALUED)
Still, the Olin story can break if global overcapacity keeps EDC pricing depressed, or if the Winchester ammunition slump lingers and drags on earnings.
Find out about the key risks to this Olin narrative.
Next Steps
The mix of pressure on Olin’s share price and a fair value closer to $22.38 gives you a clear tension to test for yourself. To weigh up the potential upside against the issues investors are worried about, review the 4 key rewards and 2 important warning signs
Looking for more Olin investment ideas?
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- Target resilient balance sheets by reviewing our list of solid balance sheet and fundamentals (23 results) so you are not caught holding fragile businesses when conditions become tougher.
- Chase better value candidates through the 35 high quality undervalued stocks and see which stocks the market currently prices below their assessed worth.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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