Olin Corporation (OLN): what the price assumes

boothcheck covers Olin Corporation (OLN) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-27.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/OLN

Headline

FieldValue
TickerOLN
CompanyOlin Corporation
Current price$18.68/sh
CompositionCaustic soda 24% / Chlorine, chlorine derivatives and other products 30% / Aromatics and allylics 8% / Epoxy resins and formulated solutions 12% / Commercial 9% / Military and law enforcement 16%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)5.7%
Operating margin (mid-cycle)9.7%
Margin compression (value-band)-4.0pp
Trailing margin (depressed year)-1.6%
Multiple paid8x mid-cycle operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7.8% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history-0.01σ
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.38x3expensive
Earnings0.20x1justifies
Relative—0—
Growth1.71x3expensive

Families that justify the price: Earnings Families that call it expensive: Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.2%); the inversion above states its own rate.

Per-Model Detail (n=7)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noFCF base $0.1B, growth 1% (input: historical growth), terminal g 0.7%, WACC 4.2%, 5yr projection
DCF Exit MultipleGrowth$14.891.25xyesExit EV/EBITDA: 12.1x / 14.1x / 16.1x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative——noP/S fallback (negative EPS): Sector P/S 1.5x × TTM revenue — excluded from consensus
Simple DDMGrowth$3.435.45xyesDPS $0.80, g=-11.4% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$-9.89—noStage 1: -200% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$15.031.24xyesReference only (book value floor): BV/sh $15.03, ROE negative
Two-Stage Excess ReturnAsset$13.521.38xyesReference only (book value with convergence): BV/sh $15.03, ROE converges to ke
Discounted Future Market CapGrowth$10.951.71xyesRev $6.7B, growth 1% (input: historical growth; tapered), Terminal P/S: 0.3x / 0.3x / 0.4x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$93.060.20xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.81B × (1−21%) / WACC 4.2% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative——noEBITDA $0.39B × sector EV/EBITDA 8.0x
FCF YieldEarnings$0.011868.50xyesFCF $100.6M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings$0.011868.50xyesSBC-adj FCF $0.08B (FCF $0.10B − SBC $0.03B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$2.577.27xyesBV $15.03 × (ROIC 0.7% / WACC 4.2%)
P/Sales SectorRelative——noRevenue $6.70B × sector P/S 1.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Chlor Alkali Products and Vinylsoperatingenterprise$3.7b—$3.5b indicative EV subtotalindicative enterprise value
Epoxyoperatingenterprise$1.4b—$1.3b indicative EV subtotalindicative enterprise value
Winchesteroperatingenterprise$1.7b—withheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net debt$2.9b
Net debt / NOPAT (after-tax)5.54x
Net debt / operating income (pre-tax)4.38x
Interest coverage3.6x
Share count CAGR (buyback)-7.1%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 9.7%); the trailing year was depressed.

Bullet Takeaways

Olin is a deep-cyclical chemical producer caught at a trough. Trailing operating margin is negative, about minus 1.7%, while the through-cycle margin runs closer to 9.7%. The price reads as a bet on reversion to that mid-cycle level, not on the current depressed earnings.

The price is supported by earnings-power and peer-multiple value, with asset and growth-DCF methods saying expensive. To justify $22 the business needs an operating margin near 5.9%, well below its own normalized 9.7% but well above today's negative reading. The gap between trough and normal is the entire investment question.

The balance sheet carries the cycle, but not without strain. Net debt is roughly $2.83 billion against thin liquid assets near $168 million, with interest coverage around 3.6x at the trough. Leverage is the variable that turns a cyclical recovery into a return or a cyclical downturn into distress.

Bull Case

Frame Olin by its stage first, because reading the trailing numbers without that frame leads you astray. This is a mature, deeply cyclical chemicals and ammunition producer at the bottom of its cycle. Trailing operating margin is negative, but the through-cycle margin runs near 9.7%, and the price at $22 (June 27, 2026) is built to revert toward that level rather than to extrapolate the trough. The implied operating margin needed to justify the price is about 5.9%, which sits between today's loss and the normalized figure. In other words, the market is pricing a partial recovery, not a full one.

The recovery levers are visible. Olin's own 10-K describes the chlor-alkali economics as driven by "energy, propylene and cumene, customer demand, and global fluctuations in supply and demand," with "periods of supply and demand imbalances" defining the cycle (FY2025 10-K, accession 0000074303-26-000027). The company has announced $185 per ton in domestic caustic-soda price increases for 2026 and returned its Epoxy segment to profitability by becoming the last integrated producer in Europe and rationalizing high-cost Brazilian assets, with $40 million to $50 million of annual cost savings. Its "Beyond two fifty" program targets removing over $250 million of structural cost by 2028. Each of these widens the margin Olin earns at any given price level.

Winchester is the ballast. The 10-K notes Winchester sales increased by $174.9 million on higher volumes even as chemical pricing fell, and management called out improved Winchester and Epoxy profitability with "favorable market dynamics for U.S. producers" in the most recent quarter. A diversified producer with a counter-cyclical ammunition franchise, announced price increases, and a structural cost program is positioned to lever margin back toward normal as the chemical cycle turns. If it gets even partway there, the earnings-power frame that already supports the price would move well above it.

Bear Case

The bear case is about the external variables Olin does not control. Caustic soda, chlorine and epoxy pricing move with global supply and demand, energy and feedstock costs. The 10-K is explicit that results depend on "energy, propylene and cumene, customer demand, and global fluctuations in supply and demand," and that supply-demand imbalances drive the swings (FY2025 10-K, accession 0000074303-26-000027). When global capacity is long and Chinese exports press on prices, a producer like Olin earns negative operating margin, which is exactly what the trailing figure shows. The recovery thesis assumes pricing and demand cooperate, and neither is on a schedule.

The balance sheet turns that cyclical exposure into real risk. Net debt sits near $2.83 billion against only about $168 million of liquid assets, and interest coverage has compressed to roughly 3.6x at the trough. Olin's senior secured credit facility runs on "a pricing grid which is dependent upon the net leverage ratio" and carries "various customary restrictive covenants, including restrictions related to the ratio of secured debt to earnings" (same 10-K). A leverage ratio that rises in a downturn raises the company's own borrowing cost precisely when cash flow is weakest, and tightens the room under its covenants. Leverage that is comfortable at mid-cycle becomes the binding constraint at the bottom.

The valuation reflects how much rides on the swing. The standard asset and growth-DCF methods read the price as expensive against trough fundamentals; only the earnings-power and peer-multiple frames support it, and those frames lean on a normalized margin the company is not currently earning. Q1 2026 revenue of $1.58 billion missed the forecast, and the company reported a loss of $0.65 per share. If the recovery to mid-cycle margin stalls, the price has no current-earnings floor to fall back on, and the debt load magnifies the downside rather than cushioning it.

Valuation

Olin is a textbook trough-cyclical valuation, and the methods scatter accordingly because trailing earnings are negative. The point estimate is anchored on a normalized through-cycle operating margin near 9.7% rather than the trailing minus 1.7%. On that normalized basis the price reads as supported by earnings-power and peer-multiple value, while asset-based and growth-DCF methods call it expensive. The implied-expectations read backs out an operating margin requirement of about 5.9% to justify $22, which is below the company's own normalized level and above its current loss. That places the price between trough and normal, consistent with a partial-recovery bet.

The single point of the range sits at the price, with an ok reliability flag, because the methods that can be computed on normalized earnings cluster near where the stock trades. The methods that depend on trailing EBITDA or trailing cash flow break down at the trough and should be discounted, not read literally; an EV/EBITDA or FCF-yield figure computed on near-zero trailing operating profit is not informative here. The honest read is the normalized-margin frame, and on that frame the price is roughly fair rather than cheap.

The balance sheet is the swing factor the central estimate cannot fully capture. With net debt near $2.83 billion, interest coverage around 3.6x, and a credit facility priced off the net-leverage ratio, the equity value is geared to the margin recovery. A move from trough toward mid-cycle margin would expand operating income, de-lever the balance sheet, and lift the earnings-power value above the price. A stalled recovery would do the reverse and pressure the covenants. The reliability flag understates the dispersion of outcomes that the leverage introduces around the central estimate.

Catalysts

Olin reported Q1 2026 with revenue of $1.58 billion, below the $1.62 billion forecast, a loss of $0.65 per share that beat the minus $0.68 estimate, and adjusted EBITDA of $86 million (Quiver Quantitative). Management guided Q2 2026 adjusted EBITDA to a range of $160 million to $200 million, a sharp sequential step up that frames the near-term recovery thesis (Investing.com transcript).

The catalysts to track are pricing realization and cost execution. Olin has announced $185 per ton in domestic caustic-soda price increases for 2026, returned Epoxy to profitability with $40 million to $50 million of annual European cost savings, and is targeting more than $250 million of structural cost removal by 2028 under its "Beyond two fifty" program (Globe and Mail transcript). Watch three things into the next two quarters: whether the Q2 EBITDA step-up actually lands in the guided range, whether the caustic-soda increases hold rather than being competed away, and whether Winchester sustains the volume strength that is offsetting chemical weakness. Realized pricing and a Q2 EBITDA beat would support the mid-cycle recovery the price assumes; a stall would leave the leveraged balance sheet carrying a trough with no near-term relief.

Peer Cohorts (Per Segment, With Filing Citations)

Chlor Alkali Products and Vinyls / Epoxy (reported)

Winchester (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

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