Why LSB Industries Shares Jumped

Why LSB Industries Shares Jumped

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 LSB Industries were looking stronger today, gaining as much as 12% after reporting second-quarter earnings.

So what: Sales at the chemical maker actually fell 3.5%, to $202.2 million, in the quarter, but that still beat expectations. Earnings per share of $0.31, meanwhile, missed estimates by $0.01. CEO Jack Golsen said the company was on the right track, pointing out that necessary repairs have been made to the Cherokee and Pryor chemical facilities, which dented profitability in the first half of the year. He also said that should lead to an improvement in LSB's chemical business in the second half of the year. Considering per-share profits dropped from $1.11, LSB was clearly not operating at full capacity last quarter.

Now what: Today's jump in the share price seems to be mostly a consequence of management getting its ducks in a row for the coming quarter. The company did not provide guidance for the rest of the year, but if it can bring its gross margin back in line with last year's, its former level of profitability should quickly return. LSB's ability to get its chemical business up to speed, and bring its ammonia plant back on line, should guide its profits in the second half of the year.

Do you want to retire penniless and in the poorhouse? Of course not! So get yourself a copy of The Motley Fool's free report, "3 Stocks That Will Help You Retire Rich." It names a group of stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Why LSB Industries Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published