S&P 500   3,852.36
DOW   32,920.46
QQQ   303.59
Mullen Automotive Stock, The Tide Has Turned
The #1 Energy Stock to Buy (Ad)
Energizer Holdings Inc; Losing Power Or Electrifying Time To Buy?
What do Mastercard Earnings Indicate About Consumer Spending?
The #1 Energy Stock to Buy (Ad)
How to Find Penny Stocks to Invest and Trade
What Tyson Foods Q1 Means For Staples Stocks
The #1 Energy Stock to Buy (Ad)
ONSemi Is Marching Higher On Great Results
Can Cummins Power To A New High? 
S&P 500   3,852.36
DOW   32,920.46
QQQ   303.59
Mullen Automotive Stock, The Tide Has Turned
The #1 Energy Stock to Buy (Ad)
Energizer Holdings Inc; Losing Power Or Electrifying Time To Buy?
What do Mastercard Earnings Indicate About Consumer Spending?
The #1 Energy Stock to Buy (Ad)
How to Find Penny Stocks to Invest and Trade
What Tyson Foods Q1 Means For Staples Stocks
The #1 Energy Stock to Buy (Ad)
ONSemi Is Marching Higher On Great Results
Can Cummins Power To A New High? 
S&P 500   3,852.36
DOW   32,920.46
QQQ   303.59
Mullen Automotive Stock, The Tide Has Turned
The #1 Energy Stock to Buy (Ad)
Energizer Holdings Inc; Losing Power Or Electrifying Time To Buy?
What do Mastercard Earnings Indicate About Consumer Spending?
The #1 Energy Stock to Buy (Ad)
How to Find Penny Stocks to Invest and Trade
What Tyson Foods Q1 Means For Staples Stocks
The #1 Energy Stock to Buy (Ad)
ONSemi Is Marching Higher On Great Results
Can Cummins Power To A New High? 
S&P 500   3,852.36
DOW   32,920.46
QQQ   303.59
Mullen Automotive Stock, The Tide Has Turned
The #1 Energy Stock to Buy (Ad)
Energizer Holdings Inc; Losing Power Or Electrifying Time To Buy?
What do Mastercard Earnings Indicate About Consumer Spending?
The #1 Energy Stock to Buy (Ad)
How to Find Penny Stocks to Invest and Trade
What Tyson Foods Q1 Means For Staples Stocks
The #1 Energy Stock to Buy (Ad)
ONSemi Is Marching Higher On Great Results
Can Cummins Power To A New High? 

Trinseo Gets A Downgrade But That Doesn't Stop It From Advancing

Key Points

  • Morgan Stanley lowered the price target on chemical and plastics maker Trinseo.
  • Trinseo has a market cap of just $670 million.
  • It’s still in its relative infancy as a public company, having IPO’d in 2014, after being formed via spinoffs of four business units from Dow.
  • Trinseo is tracked in the S&P 600 small-cap index. 
  • 5 stocks we like better than Trinseo
Trinseo Gets A Downgrade But That Doesnt Stop It From AdvancingYou’re probably not alone if you’ve never heard of Trinseo (NYSE: TSE), a small, Pennslyvania-based maker of synthetic rubber, latex and plastic products sold to manufacturers. 

But analysts at Morgan Stanley sure are familiar with Trinseo, lowering the price target from $33 to $20, with a designation of “equal weight.” That new price target is only fractionally higher than where it’s currently trading. 

Analyst ratings often result in price movement in a stock. In Trinseo’s case, the stock actually got a bounce higher on Thursday, ending the session at $19.23, a gain of $0.61 or 3.28%. Trinseo’s price action mirrored that of the broader market, with a big decline early in the session on news of inflation running hotter than expected. As the session wore on, stocks rallied, for big daily gains. 

Trinseo has a market cap of just $670 million. It’s still in its relative infancy as a public company, having IPO’d in 2014, after being formed via spinoffs of four business units from Dow Chemical (NYSE: DOW). A somewhat new company like Trinseo is often in a good window to notch big price gains. 

The most appropriate benchmark for Trinseo is the S&P 600 small-cap index, as tracked by ETFs such as the SPDR Portfolio S&P 600 Small Cap ETF (NYSEARCA: SPSM). The index is down 23.65% year-to-date, while Trinseo has declined 62.07%. 

However, keep in mind: Heavily-weighted S&P 600 stocks, and their year-to-date returns, include:


As you see, these heavily weighted stocks are outpacing Trinseo by a wide margin. 

What are the potential pitfalls for Trinseo? Whenever a company is a supplier to other industries, it’s incumbent upon investors to consider the outlook for its customers. For example, Trinseo’s enterprise customers hail from industries including consumer electronics, medical, automotive, and food packaging. 

Immediately you can identify customers that may suffer an inflationary and recessionary environment. For example, the auto industry has been struggling due to supply-chain issues, some of which are due to problems in the chip industry

A look at Trinseo’s revenue in recent quarters tells a not-so-great story: While sales continue to grow, growth rates have been decelerating for the past four quarters, from 138% to 12% most recently. As that occurred, earnings growth first decelerated, then began falling.

Trinseo’s three-year earnings growth rate is solid, at 70%, reflecting growth in 2020 and then a large increase last year. Its three-year revenue growth rate is more tepid, at 11%.

Make no mistake: The company is expected to remain profitable, but earnings have been falling sharply. For example, in 2021, Trinseo earnings came in at $9.64 per share. This year, analysts expect Trinseo to earn $3.02 per share, which would be a decline of 69%.

All in all, the chemicals and plastics sub-industry is struggling, so Trinseo isn’t an outlier in an otherwise strong area of the market.

For example, even the best price performer, Tredegar (NYSE: TG), which makes plastic films, elastics, laminates and other materials for packaging and surface protection, is down 12.69% year-to-date. 

Dow is the largest group component, by market cap, weighing in at $32.96 billion. It’s part of the S&P 500. Dow has declined 19.06% this year, and is also down in shorter rolling time frames.

The lesson about Trinseo is: Even though a stock is trending because of an upgrade or downgrade, that doesnt’ necessarily mean it’s at an attractive buy point. Given the overall poor performance of its industry, and the fact that Trinseo is being outpaced by so many of its peers, it may be wise to continue monitoring performance. As inflation and recessionary concerns wallop these stocks, there are likely more suitable candidates for your watch list at this time. 
Trinseo Gets A Downgrade But That Doesnt Stop It From Advancing

Should you invest $1,000 in Trinseo right now?

Before you consider Trinseo, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Trinseo wasn't on the list.

While Trinseo currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Investing Strategies To Help Grow Your Retirement Income

Need to stretch out your 401K or Roth IRA plan? Use these time-tested investing strategies to grow the monthly retirement income that your stock portfolio generates.

Get This Free Report
Investing Strategies To Help Grow Your Retirement Income Cover

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Trinseo (TSE)
1.715 of 5 stars
$29.25-3.8%4.38%24.79Moderate Buy$22.89
DOW (DOW)
2.649 of 5 stars
$60.09+0.2%4.66%9.63Hold$59.85
Tredegar (TG)
1.8376 of 5 stars
$12.21-1.6%4.26%7.68N/AN/A
SM Energy (SM)
2.6098 of 5 stars
$31.40-2.3%0.96%3.05Moderate Buy$50.75
Agree Realty (ADC)
2.1231 of 5 stars
$74.21+0.2%3.88%40.55Buy$78.50
AMN Healthcare Services (AMN)
2.5075 of 5 stars
$101.28-2.5%N/A9.76Buy$142.60
Livent (LTHM)
2.093 of 5 stars
$25.05-3.5%N/A25.05Moderate Buy$28.78
Ensign Energy Services (ESI)
2.2915 of 5 stars
C$3.56-5.6%N/A-5.30Moderate BuyC$6.25
SPDR Portfolio S&P 600 Small Cap ETF (SPSM)N/A$41.28-1.6%1.24%N/AN/AN/A
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

Contributing Author: Retirement, Asset Allocation, and Tax Strategies

Kate Stalter is a Series 65-licensed asset manager, with more than two decades of experience in various areas of financial services. As an investment advisor and financial planner, Kate personally manages client portfolios, with a focus on successful retirement, including asset allocation, income generation and tax strategies. Kate also serves as a capital-markets contributor at Forbes.com, and is an expert columnist for the investment advisory channel at U.S. News & World Report.
Contact Kate Stalter via email at stalterkate@gmail.com.

Featured Articles and Offers

Search Headlines: