The Analysis and Valuation of
Olin Corporation (OLN)
By At the Demmon
Published on 12 , 13, 2011
Industry and company1
Management and Ownership3
Exploration of financial statements3
Discussion of monetary ratios4
VIEW AND FORECAST4
Essential value drivers5
Risks, caveats, and exposures6
Summary of essential series7
Selected growth rates7
Components of measured average expense of capital (WACC)7
Free cash flows and economic profit7
As a pupil analyst to get Drake University's Krause Problem Fund, I use conducted economic analysis and valuation of Olin Company, a maker of Chlor Alkali companies Winchester ammo. Olin has undergone restructuring and bought the other half of a previously owned subsidiary, that i expect to lessen operating costs. The current selling price undervalues the business. Therefore , I suggest we order Olin intended for our portfolio. The following is the detailed effects of my personal analysis. BACKDROP
Industry and company
Olin Corporation is a manufacturer of two key segments: Chlor Alkali companies Winchester ammo. The company has existed for over 100 years and is an important market player within United states. Headquartered in Clayton, MO, Olin provides multiple developing facilities with the United States and one site in Canada. Chlor Alkali
Olin is the third largest maker of Chlor Alkali products and the largest developer of industrial bleach in North America according to data via Chemical Market Associates, Incorporation.. Chlorine and caustic soft drink are the co-products Olin makes in set ratios called Electrochemical Devices (ECU) through the electrolysis of salt. Both equally chlorine and caustic soda are used within the manufacturing of bleach. A whole list of end-products can be found on page 30 from the appendix. Competitive environment
Chlor Alkali sector is a commodity business with product differentiation largely based upon price. Production is very capital intensive, which usually does make some economical barriers to entry. The two largest manufacturers, DowChemical and OxyChem make use of most of many to production other downstream products. Olin differentiates by itself from rivals by concentrating the service provider market. Sales and growth
This is a cyclical sector. This cyclicality arises mainly because supply is limited by the physical capacity of producing facilities and ability to sell off the co-product. Given these are commodity goods, prices are incredibly responsive to within supply and demand. Timing capacity progress with the routine leads to a growth in revenue. Demand for end-products ultimately pushes demand for Chlor Alkali. The power advantage United states has by using natural gas instead of crude oil has exploded exports of end-products. Customers
Most of sales are to the merchant marketplace. The company can capture a greater share of the merchant chlorine market than its general share of the market capability because it focuses on the merchant market rather than using the items in downstream production. Costs and Suppliers
Almost 50% of creation costs can be raw materials. The 2 major demands are electricity and salt. Electricity originates from coal, hydroelectric, natural gas and nuclear electric power. Regulatory
Olin must adhere to legislation regarding the environment, such as air, normal water and property quality, which usually requires capital expenditures and increases operation costs. The company has programs in place to reduce waste and prevent pollution. Laws was approved in August 2009 around the use of mercury cell technology, but out of date without achievement. This would have got increased the expenses of operating mercury cell capacity, of which Olin provides one center. Since it is uncertain whether something similar...
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