Analysis of Engelhard Corporation When deciding to purchase stocks, ma

Recent years have seen an increase in the production capabilities of basic chemical producers; these are the companies which supply raw materials to Engelhard. It can thus be anticipated that the company will see a downturn in raw materials pricing, which should increase the profit margin enjoyed by the company, but that increase is not likely to happen for several more quarters (Coyle 496).

Competition in this industry can be intense as contracts with companies such as Ford and other large manufacturers can be worth hundreds of millions. As a result, the competition is likely to take advantage of any opportunities that Engelhard gives it. Engelhard has been particularly successful in its automotive emission catalysts, boosting sales for the second quarter of 1997 by 14 percen

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the costs of doing business in this industry. The company has a low dividend rate from an absolute standpoint of only 1.67 percent, but this is in keeping with the industry average of 1.98 percent and in keeping with the strategy of reinvesting earnings rather than paying them out to investors in the form of dividends (Moody's Investors Service 2). Those looking for an income stock should consider a different issue. The one area where the company has some financial concerns is in its debt position, although the company still is in better shape than the overall industry. The concern here is not with current obligations (the company has a current ratio of 1.11:1) but instead with long-term debt. The company has a long-term debt to equity ratio of 45.02; this compares favorably to the industry average of 58.97, but is still high. However, analysts typically attribute the debt level to the company's acquisition of Mearl Corporation in 1996 and expect that the company will provide serious debt relief in the next few years. This is the only major financial concern currently facing the company (Moody's Investors Service 2). Recent Stock Performance Adjusting for stock splits, the company's stock has increased from a low of 4.5 i
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