Investors might want to consider Croda shares after the stock dropped to 7,138p from its high of 10,100p at the beginning of the year.
This is a significant drop for a company that has consistently posted increased dividends over the past ten years and recently said they enjoyed a 46.6% increase in operating profit in 2021.
Croda International Share Price
Croda shares are currently trading at 7,138p – the lowest level since 24 February 2022 – having fallen from recent highs of approximately 7,484p. The stock is down 30% year-to-date.
“This is not the company’s fault. It’s just the result of the stock’s lofty valuation and investors’ ongoing switch away from highly-rated growth stocks at a time of rising interest rates and toward commodity and raw materials plays at a time of rising prices and inflation,” said AJ Bell Investment Director Russ Mould.
The drop in price potentially represents an interesting opportunity for investors who see value in the company’s strong financial results.
Croda International saw an increase in operating profit of 46.6% to £468.6 million against a 2020 figure of £319.6 million.
The Group’s profit before tax was £445.2 million in 2021 against a result of £300.6 million in 2020.
The company reported that all its businesses were trading ahead of pre-Covid-19 pandemic levels, and saw growth in areas including life sciences and from its recent acquisitions.
However, Croda International shares have experienced a decline due to its pipeline of 150 Covid-19 related projects, in addition to a further 90 throughout 2021 falling in relevancy as the rates of international vaccination increased.
Expectations for 2022
The company’s growth is predicted to continue in line with its medium-term expectations.
Croda International expects strong consumer demand, inflation cost recovery and the benefit of its recent investments to offset moderation in customer restocking.
Following the sale of Croda’s performance technologies and industrial chemicals businesses (PTIC) to agricultural production company Cargill for £778 million, the Group is apparently set to streamline its business and give the company an increased level of capital to reinvest in its upcoming growth.
“[The deal] will release more capital to reinvest in faster growth, higher return markets, positioning us to deliver more consistent sales growth and an even stronger profit margin,” said Croda International CEO Steve Foots.
Croda International’s dividend
Croda International’s statutory basic earnings per share in 2021 saw an increase of 48.3% to 230p compared to 155p in 2020.
The company’s ordinary dividend per share increased 9.9% to 100p against a figure of 91p in 2020.
The Group has seen a healthy dividend progression over the past two years, with increased returns to shareholders year on year.
the Croda share price currently provides a dividend yield 1.4%.