ROH Fundamental Research Investment Analysis, Rohm and Haas Company

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Rohm and Haas Company (ROH)

The Razor's Edge

2-Year Price History

Recent Price
(2/13/2009)
$59.47
52-Week Price
$44.13 - $86.41
Market Capitalization
$11.6 Billion
Dividend Yield
2.80%
Most Recent Dividend
$1.60

About Rohm and Haas Company

Rohm and Haas Company is considered to operate in the Basic Materials sector. They specifically operate in the Chemicals-Major Diversified business segment contained within the Chemicals industry.

A global materials company that leverages science and technology in many different forms to design materials and processes that enable the products of its customers to work.

Ockham's Rating

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ROH Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, ROH the high and low end of the Price to Sales per share ratios are 0.99x and 0.67x respectively.

Notice that ROH's current Price to Sales per share ratio is 1.10x, which is high enough compared with historical norms of ROH to cause some concern. The current Price to Sales per share is near the upper end of the historical range. In our eyes, this is a negative factor because it is more likely that it will return to the normal range than continue rising outside of the range. At current sales per share levels, we would need to see a decline in the Price to Sales ratio of 33% merely to return ROH to its historical average.

ROH Cash Earnings

Looking at ROH specifically in their Cash Earnings capabilities, Ockham views ROH as significantly above its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from ROH. For example, ROH's Cash Earnings ratio per share has fluctuated between 4.76 and 6.98 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where ROH is with respect to prior business periods.

So what does this tell us about ROH in particular? Basically, we would value the current level of Cash Earnings per share (which is at 7.88) as significantly overvalued. Just by looking at the last closing price of ROH, which was $59.47, we can see that compared to the historical high Price to Cash Earnings levels we calculated, the market has already rewarded ROH with a higher stock price. So basically, we don't view this level of Cash Earnings or stock price as compatible with a long term value at this point. Just remember, that does not mean that ROH may not have other merits with which to find a good investment opportunity, it just means that we would prefer to see either an increase in Cash Earnings or a decrease in stock price before we would become bullish on this metric.

ROH Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from ROH against the historic high and low levels over an available data range. Because ROH has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In ROH’s case, the estimated annual dividend is $1.64 producing a current dividend yield of 2.76%. The highest dividend yield from ROH in recent history was 3.72% while the lowest dividend yield was 1.58%. A current dividend yield of 4.15% above the historical median is favorable in our analysis of ROH.

Peer Comparison

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Rohm and Haas Company Industry Grouping

(2/13/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding ROH) 5.48 5.28 » 30.77 0.90 0.71 » 2.13 13.05% 20.51%
*10 year range does not include current year values
Rohm and Haas Company ROH $11.6 Billion $59.47 7.88 4.61 » 12.38 1.10 0.78 » 1.68 9.21% 15.50%
Air Products & Chemicals, Inc. APD $11.3 Billion $54.03 5.46 7.08 » 12.82 1.02 0.97 » 2.25 10.59% 16.18%
The Dow Chemical Company DOW $8.8 Billion $9.53 1.23 1.88 » 26.19 0.19 0.24 » 1.39 14.15% 21.62%
Agrium Inc. AGU $6.4 Billion $40.52 3.56 2.49 » 20.94 0.60 0.41 » 2.28 20.40% 13.97%
Sherwin-Williams Company SHW $5.5 Billion $46.94 7.28 5.34 » 25.12 0.69 0.52 » 1.13 9.08% 31.16%
Sigma-Aldrich Corp. SIAL $4.8 Billion $38.41 9.87 9.64 » 68.76 1.98 1.40 » 3.59 11.05% 19.64%
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RazorWire™ & Community Discussion

Mad Money
2/13/2009 6:44 PM
Mad Money
Mad Money
Quote baback. Go ahead. >> caller: ceg, consolation >> no, it's done. That takeover's happened. Treasurers witness anyone who says in ROHM AND HAAS. It's time to take a profit. Let's go to leona in pennsylvania. >> caller: jimbo, a triple boo-yah, boo-yah, boo-yah from the steeler country.
Squawk On The Street
2/13/2009 9:48 AM
Squawk On The Street
Support that dividend. It will be interesting to see what their arguments are when they face chancellor chandler less than a month from now. ROHM AND HAAS was up yet again yesterday, up again today. >> thank you, david faber. Still to come, the latest read on consumer sentiment. The fan favorite as they usually say, peanut butter and jelly, friday trade.
Fox Business
2/12/2009 2:09 PM
Fox Business
Economic environment and business uncertainty and they have to lower the didend due now. The ROHM & HAAS has been a point of contention and when they have the country of kuwait pulling out of infusing quite a bit of money to help make that happen, this was the beginning of a chemical. >> the stock is down about,
Power Lunch
2/12/2009 12:59 PM
Power Lunch
A judge rejected an attempt by dow chemical to disqualify lawyers representing ROHM & HAAS. Freddie mac says the 30-year fixed rate fell to 5.25%.
Squawk Box
2/10/2009 8:56 AM
Squawk Box
Squawk Box
Lower. Monsanto has hung the in there. The high is 145. Come down quite a bit. Above the low of 63. Down ROHM & HAAS. The kuwait investment authority considering increasing support for the takeover of ROHM & HAAS for the terms are adjusted to reflect the economic downturn. You may recall it was when the deal fell apart that called into question. ROHM & HAAS is trading higher as international continental trade a penny below expectations. Along with the outlook of the company, traders don't like it.
Squawk Box
2/10/2009 7:53 AM
Squawk Box
Squawk Box
Quote on rome and haas. You know what kia is. The kuwaiti investment might consider increasing its support for dow takeover of ROHM AND HAAS. >> if you are really, really >> and if the terms of the deal were adjusted to reflect the >> yes, but it also says that they're not very likely to come in with a $7.5 billion that they
Countdown to the Closing Bell
2/9/2009 3:59 PM
Countdown to the Closing Bell
By the end of 2009, and the fact that g.M. May buy back part of we heard from ROHM & HAAS, mcdonalds, hasbro, beazer homes up 20%. Staying in the trading range up and down nearly ten times only
Fox Business
2/9/2009 10:05 AM
Fox Business
Wyeth, pfizer, adobe, names upgraded and lennar and biogen idec have been downgraded. We've got earnings, earnings, more quarterly numbers and things to watch, ROHM & HAAS under some pressure, hartford financial has been up 17%, whirlpool down about 10% and mcdonald's, plus, they did see the same-store sales climbing more than 7%.
Squawk On The Street
2/9/2009 9:46 AM
Squawk On The Street
Market declines impacted all their businesses. Remember, they own morton salt, which by the way could be a candidate for sale if and when this deal actually occurs. That's something ROHM AND HAAS you're worried about your financial position? When we get together, sell. Business has also generated cash in excess of a billion.
Squawk On The Street
2/9/2009 9:45 AM
Squawk On The Street
The right thing, so to speak. We believe the right thing is ultimately to say, wait a second, putting these two companies together at this point would do damage to both of them, not to shareholders of ROHM AND HAAS but perhaps to its employees. Untenable situation. Shouting back at dow is ROHM AND HAAS which came out with earnings the other day saying things like, hey, are you we believe you have the resources and the flexibility to live up to your obligations under the merger agreement.
Squawk On The Street
2/9/2009 9:45 AM
Squawk On The Street
Delaware on march 9th, where they're going to begin the court case to see whether it will be forced to pay $78 a share to buy ROHM AND HAAS with the contract that the two signed some time ago states it must. The dow camp, lawyers there and people close to dow saying, hey, listen, we're going to rely on
Squawk On The Street
2/9/2009 9:44 AM
Squawk On The Street
Sneeze. >> thanks, erin. It's been a few days so I thought we'd get back to that fabulous battle that is still just nasty punch after punch coming back and forth. I'm talking about ROHM AND HAAS and dow chemical. Particularly interesting when we think about dow chemical, the pressure that the ceo is under, the board of directors and the stock price is under for those
Squawk On The Street
2/9/2009 9:39 AM
Squawk On The Street
Bore into stocks and hope that the market goes up. >> thanks, mark. >>> the faber report. David's got more on the dow's continuing rumble with ROHM AND HAAS. >> and one small colorado town thateating the odds because it's got gas. Lots and lots of -- not cows, mark.
Squawk Box
2/9/2009 8:57 AM
Squawk Box
Squawk Box
It beat the consensus. You've got some of the other stocks acting much better today like fifth third. Bank of america. ROHM AND HAAS reporting 69 cents a share if you take out items. That was above expectations. >> but that stock's not trading -- ROHM AND HAAS is not trading on any fundamentals at >> I think pointed out over the weekend, fell backwards, sheer
Money For Breakfast
2/9/2009 8:14 AM
Money For Breakfast
It over. That's been held up. Time to get the deal done. We will see how it plays out. That had helped the stock price when it was initially announced. ROHM & HAAS keep an eye on it couple cents better than the transition of digital television pushed back to the month of june. We will tell you straight ahead why it might affect your
Money For Breakfast
2/9/2009 8:13 AM
Money For Breakfast
I want to talk about the op-ed piece in the financial times from lloyd blankfein. Mcshane with breaking news. Connell: earnings again. ROHM & HAAS just came out. Looks like it earned a couple pennies better than the street excluding certain items looking at 69 cents per share for ROHM & HAAS the estimate was 67 cents per share. There's 56.50 at the close on that one year time frame is up by 4 1/2%. You see the big spike when the
Squawk On The Street
2/3/2009 9:45 AM
Squawk On The Street
Complaint that dow filed today in delaware court as it gets ready for the big lawsuit about the deal to require ROHM & HAAS. Dow chemical earnings were not bob pisani, I don't know why mark calls them cool, I got to find it out. I like it.
Squawk On The Street
2/3/2009 9:39 AM
Squawk On The Street
Parking their money. >> thanks very much. >> up next the faber report. Things are heating up in the delaware courts. Between dow and ROHM & HAAS. And there's nothing david likes more than a corporate cat fight. >>> as we said, senator schumer
The Opening Bell on Fox Business
2/3/2009 9:31 AM
The Opening Bell on Fox Business
Maker, some people a saying sink in order to figure out how to get out of the deal with rome ap haas, when kuwait pulled out of the dow chemical deal makes it harder to do the ROHM & HAAS deal. After cher daniels andmerck up 3 and 5% respectively. Time warner, some of the other
The Opening Bell on Fox Business
2/3/2009 9:27 AM
The Opening Bell on Fox Business
Lost 60 some odd cents a share and the stock hammered. And now it's looking up 4%, so, i'll try to figure that out. I know they filed a response to the ROHM & HAAS deal and all the conditions have been met, but looks like dow chemical be alexis: ashley. Ashley: I think that investors are numb.
Money For Breakfast
2/3/2009 7:09 AM
Money For Breakfast
Stock 52 week high was at $43 that things are pretty bad here, how do they turn this story >> I think the problem they have is -- I think the big thing people need to focus on is they have the term loan the financing of ROHM & HAAS that expires in one year which I believe is going to be january 2010, and then they basically have to use either proceeds to pay it down or they might have to cut the dividend to keep the credit ratings high enough where they
Money For Breakfast
2/3/2009 7:07 AM
Money For Breakfast
If the court gives them time and they can sell these commodity businesses, and they are talking to several buyers right now, then everything washes out and everything is fine. It's just a question of timing. Does it happen now? Does ROHM & HAAS have to happen over the summer, in the fall? Can they sell these businesses and get cash for them in the meantime? If they can, then things will be if they are forced to swallow ROHM & HAAS now, it is going to be bad news for shareholders. It's going to be bad news for a lot of people because the debt burdens, the credit rating agencies are all going to come down on the combined entity, and I think based on what the judge
Money For Breakfast
2/3/2009 7:06 AM
Money For Breakfast
So it's just not clear what kind of value they would get or who would be interested in this type alexis: todd, you know, it seems like the perfect storm for them, a combination of this kuwaiti deal falling apart. The situation with ROHM & HAAS which, you know, six months ago seemed like a reasonable deal and now it's not that reasonable given the current climate. Where does this stand? >> well, right now ROHM & HAAS is before the court, and the court has discretion on the equity that they can decide on. They can say to ROHM & HAAS, yes, dow has to complete this transaction which dow still wants to do by the way. But they can come back and delay the equity and when they have to close it, and they have a wide
Money For Breakfast
2/3/2009 7:06 AM
Money For Breakfast
First talk about this kuwaiti >> it is important. They expected proceeds of over 9 billion dollars which was going to be use to fund at least half of the ROHM & HAAS purchase. That's why the collapse of that deal was important because that calls into question their ability to go through with the alexis: some have suggested that perhaps they sell that commodity
Squawk On The Street
1/28/2009 10:18 AM
Squawk On The Street
Been identified for trial is the of course the remedy they want is specific performance. Namely $78 a share. The only issues -- he says what will happen, he goes on to say, it's not ROHM AND HAAS apdz problem, this bridge loan. We bargained for a closing. We bargained with the bridge financing in place. Dow is admitting the bridge financing today can be drawn upon. We'll see. Interesting.
Squawk On The Street
1/28/2009 10:17 AM
Squawk On The Street
Between now and then, probably a lot of spec as to which way things will go. We had a hearing yesterday -- you see ROHM AND HAAS' share price -- now you're looking at chandler is favoring dow's case who knows? You can't read too much into that. Let me share with you one point from each of the lawyers, the bernic on the part of dow, and woelenski on the part of ROHM AND HAAS. Those litigators who are out bernick says if we're unsuccessful in renegotiating the bridge loan, we almost don't
Squawk On The Street
1/28/2009 10:09 AM
Squawk On The Street
It done. Their net and their earnings per share were both positive on a year over year basis. >> up next, the faber report. Things are heating up between the dow and ROHM AND HAAS. David has the latest. >> the salacious tales. But first, inside those numbers from boeing. And plus we've got the ceo of
Squawk On The Street
1/28/2009 9:45 AM
Squawk On The Street
>> thank you both very much. >> up next, faber's back with his famous report. Things are heating up between dow and ROHM AND HAAS, I guess. That's what he's talking about. >> that's as close to salacious as we get here, sorry, everybody.
Squawk On The Street
1/27/2009 9:13 AM
Squawk On The Street
To, but when he raises ideas of invol insolvency, that raises a he's obligated to do the deal whether it has financing or not. We'll keep an eye on how ROHM & HAAS shares due today. Off yesterday but still hanging in there because many think what they ultimately lyly want is a price
Squawk On The Street
1/27/2009 9:11 AM
Squawk On The Street
Large companies in a potential, likely it would seem at this point, court battle in delaware. It's going to be chancellor chandler that handles the case brought yesterday by ROHM & HAAS against dow chemical saying we have a merger agreement that says you need to close this two days after approval. We're suing you for specific performance. That performance be buying us at $78 a share. You see where ROHM & HAAS is. As you may expect the plot continues to thicken. In one way because andrew liveris, well done, sir, comes
Squawk On The Street
1/27/2009 9:00 AM
Squawk On The Street
Dupont reported a bigger than expected loss and gave a downbeat current quarter forecast. Dow ceo told cnbc the company would still like to require ROHM & HAAS but dow decided not to cleat the deal because financial conditions would make the deal disastrous. Stock futures pointing to a higher open on wall street this that's cnbc.Com news now.
Squawk Box
1/27/2009 8:01 AM
Squawk Box
Squawk Box
>> the key point is this. Combining these two great companies at this moment in time would be an economic disaster for both companies. Dow is fine on a stand-alone basis. ROHM & HAAS is fine on a we're just saying we can't do the deal right this minute to protect everyone concerned. >> dow shares are indicated again, that's close to a new as for ROHM & HAAS, the stock fell more than 13% on monday, but it's still hanging in there, people would say. Definitely, because i've seen numbers where that would create stand-alone -- would have been
Squawk Box
1/27/2009 7:55 AM
Squawk Box
Squawk Box
That stock indicated lower. Verizon reported 61 cents. That was in line with xnkss on revenue that was slightly below. Dow and ROHM & HAAS, we'll be watching later today. We had an interview with liveris. You probably have to go to the website because we got to do some other things here. Bristol-myers, fourth quarter at that was 5 cents ahead of --
Squawk Box
1/27/2009 7:10 AM
Squawk Box
Squawk Box
Deal today. >> andrew, obviously, there's a lot of conjecture that behind the scenes you may have gone to ROHM & HAAS to say what do we do here? Are you seeing any openness at all at ROHM & HAAS to a different term renogotiating the deal? If you talk to him and are you getting anywhere? >> I want to take this opportunity to answer that question, joe, by starting out by saying I have huge respect for the leaders and the people of ROHM & HAAS. It is a beachfront property. It's a great company. It's a great enterprise and great relationship. They have been very open to discussions in the last several weeks. Aye got to keep reminding all of us it's only been a few weeks.
Squawk Box
1/27/2009 7:06 AM
Squawk Box
Squawk Box
You know, the world does not work in two-day increments. I'm not here to satisfy everybody on a day to day basis. We have to think about the long-term here. A 9 the-year-old company in ROHM & HAAS and a 12-year-old company in dow should be around for a lot longer than just a few days in terms of prices in the stock market going up and down. Future, and that's what my job
Squawk Box
1/27/2009 7:04 AM
Squawk Box
Squawk Box
Little bit of a delay. I think we have a little built of a delay as well. >> that's okay. >> even credit analysts that look at your balance sheet, the price that was agreed upon with ROHM & HAAS, it doesn't work in today's marketplace. What price works for you at this what price works for you, and what would have to happen in terms of financing for you to be able to go ahead with this deal?
Squawk On The Street
1/23/2009 9:47 AM
Squawk On The Street
But in this market, doesn't >> one of the other things we talked about this morning think of the bull deals that have been tried in the past couple of bank of america, countrywide, dow and ROHM & HAAS and those that fell apart when financing got really tough. Do they look at the big gambles as smart or as gutsy as they used to, especially given
Squawk On The Street
1/5/2009 9:12 AM
Squawk On The Street
Other people telling me you're wrong, david. It wouldn't be 20, it would be the point is it would be a lot you can see dow stock having gotten crushed. ROHM & HAAS' stock rebounded back up to the $64 level. This week ROHM & HAAS, dow are expected to get antitrust approval. Expected to get scott hart clearance under the antitrust that would essentially leave it time to buy it, time to step in,
Squawk On The Street
1/5/2009 9:11 AM
Squawk On The Street
That stock went down 20% or more out of concerns about dow. Then, of course, the question about really it's going to do a $15 billion deal or so to acquire ROHM & HAAS, $78 a share in cash with a $13 billion bridge loan associated with it in a very tough economic environment, paying that for a company that is worth a lot other people telling me you're
View All Rohm and Haas Company Comments

Key Fundamentals

ROH - Rohm and Haas Company Fundamentals
Price (2/13/2009) $59.47
Volume (2/13/2009) 1.9 Million
10 Day Average Volume 2.6 Million
13 Week Price Range $47.23 - $73.45
52 Week Price Range $44.13 - $86.41
LTM Revenue $9.6 Billion
 
Shares Outstanding (12/2008) 195.2 Million
Market Capitalization $11.6 Billion
Shares Held By Institutions 158.4 Million
Institutional Holders 475
% Shares Held By Institutions 81.20%
Earnings Per Share (EPS) $2.48
P/E Ratio 24.00
Book Value Per Share $17.11
 
Gross Margin 27.80%
Quarterly Dividend 1.64
Dividend Yield 2.80%
Beta 0.40
Fiscal Year Ends December