As the market here within the US continues to hover around all-time highs, quality value stocks are getting harder and harder to find. However, Europe’s markets remain depressed, which makes them a great place to find some value opportunities.

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So, in this four-part series I’m hunting for value within Europe, trying to find two companies that look attractive based on their current valuation and outlook. Parts one, two and three of the series can be found here.

In part three my screening criteria picked out Solvay S.A. (EBR:SOLB) (OTCMKTS:SVYZY), a leading global chemicals company that looks attractive based on its valuation and impressive return on capital.

I’ve already covered Solvay’s financials in part three so in this part I’m going to take a look at the company’s outlook.

Solvay’s double-digit ROIC

As already covered, Solvay S.A. (EBR:SOLB) (OTCMKTS:SVYZY) is currently achieving a double-digit ROIC and FCF/Market cap. However, the company wants to transition into an even less capital intensive group, with the scope for rapid growth and greater return on investment.  Two key steps in this plan have been the creation of a joint-venture to set up a world-class chlorovinyls, or PVC producer, and the acquisition of Chemlogics a leading player in the United States’ oil & gas chemicals industry.

Both of these initiatives will have a significant impact on Solvay S.A. (EBR:SOLB) (OTCMKTS:SVYZY). For a start, it is expected that the PVC market will be oversupplied for the next few years, a prediction that has led Dow Chemical to sell off many of its own PVC production assets. With the world-leading partnership, Solvay will be able to push costs down and mitigate lower PVC selling prices; a consequence of the market’s oversupply. Actually, Solvay provides figures on how this venture is expected to impact the company. Solvay’s management predicts that the company’s PVC REBITDA margin will expand by 170 bps due the deal, up to 18.3%.

Chemlogics acquisition give exposure for Europe shale oil industry

What’s more, the Chemlogics acquisition gives Solvay S.A. (EBR:SOLB) (OTCMKTS:SVYZY) exposure to the rapidly growing shale oil industry –Chemlogics sales and EBITDA have themselves grown at a double-digit CAGR for the last four years. Solvay paid 10.7x EBITDA for Chemlogics and has already identified significant synergies to be gained from the deal. If Chemlogics continues to grow at a double-digit rate, the company should pay for itself.

Aside from these two deals Solvay is slashing costs, improving efficiency and driving earnings higher across all of its existing divisions. Management are currently forecasting REBITDA of €2.3 billion to €2.5 billion by 2016, that’s growth of 52% from current levels, if the company hits the high end of estimates

However, aside from operational performance, Solvay S.A. (EBR:SOLB) (OTCMKTS:SVYZY) is active in R&D, securing innovative products and processes to keep the company ahead of the game and in its world leading position. The company has 13 major research centers worldwide with over 2,000 employees and also sets aside millions of euros each year for venture capital and startups. Most of this research is concentrated on organic electronics, renewable chemistry and sustainable energy along with others. Solvay was behind the technology that enabled the Solar Impulse flight across America.

So in conclusion, Solvay S.A. (EBR:SOLB) (OTCMKTS:SVYZY) looks attractive based on its current valuation and operational efficiency ratios. In addition, the company is undergoing a transition towards a less capital intensive but more cash generative model, which should see its return on capital and growth improve over the next few years.