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Chemical Stock Earnings Due on Oct 24: DOW, EMN, AXTA & GRA

Anindya Barman

A few chemical companies are gearing up to report their quarterly numbers on Oct 24. Per the Zacks industry classification, the chemical industry is under the broader Basic Materials sector. The Q3 earnings picture for Basic Materials looks gloomy. The sector is among the Zacks sectors that are expected to see a double-digit decline in earnings in the September quarter. Overall earnings for the sector are projected to fall 23.4% on 7.7% lower revenues, per the latest Earnings Preview.

Chemical companies are expected to have faced some demand weakness in Q3, which is likely to have impacted results. Trade conflict has led to a slowdown in industrial activities across Asia and Europe, hurting demand for chemicals and plastics.

In particular, chemical makers are seeing soft demand in China due to a sluggish Chinese economy. Notably, the trade tiff has led to slow demand in the automotive market (a major chemical end-use market) in China.

Companies in the chemical space are also facing headwinds from a spike in costs of raw materials. Third-quarter results are expected to continue to reflect the impact of input cost inflation, albeit to a lesser extent than what was witnessed during the first half of 2019.

Nevertheless, chemical makers are benefiting from strategic measures, including cost-cutting and productivity improvement and actions to raise selling prices. A number of companies are taking aggressive price increase actions in the wake of raw material cost inflation. Chemical companies also remain actively focused on acquisitions to diversify and drive growth. Benefits of these initiatives might be reflected in their Q3 results.

We take a look at four chemical companies that are gearing up to report their results tomorrow.

Dow Inc. DOW will report Q3 earnings numbers ahead of the bell. Our proven model does not conclusively predict that Dow is likely to beat the Zacks Consensus Estimate this quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, Dow has an Earnings ESP of -1.09% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for Dow’s Q3 revenues is currently pegged at roughly $10.7 billion. Moreover, the Zacks Consensus Estimate for earnings currently stands at 72 cents.

The company’s Q3 performance is expected to reflect the impact of ethylene cracker downtime in Argentina, margin pressure in siloxanes and lower equity earnings from major joint ventures. However, its earnings are likely to have benefited from cost synergy savings and lower maintenance turnaround spending in the quarter. (Read more: Dow Warms Up to Q3 Earnings: What's in the Offing? )

Dow Inc. Price and EPS Surprise

 

Dow Inc. Price and EPS Surprise

Dow Inc. price-eps-surprise | Dow Inc. Quote

 

Eastman Chemical Company EMN will report Q3 results after the closing bell. Our proven model does not conclusively predict an earnings beat for the company this time around. This is because it has an Earnings ESP of +0.10% and a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eastman Chemical missed the Zacks Consensus Estimate for earnings in three of the trailing four quarters while beat once. In this timeframe, the company delivered an average negative surprise of roughly 5.8%.

The Zacks Consensus Estimate for Eastman Chemical’s Q3 revenues is currently pegged at $2,366 million, indicating a roughly 7.1% year-over-year decline. The Zacks Consensus Estimate for earnings currently stands at $1.99.

Revenues from Eastman Chemical’s Additives and Functional Products division are expected to witness an 8% decline year over year as the Zacks Consensus Estimate for Q3 is pegged at $842 million. Advanced Materials unit’s revenues are expected to fall 3.2% year over year as the Zacks Consensus Estimate is $686 million.

Revenues for the Chemical Intermediates segment are projected to decline 9.2% from the year-ago quarter as the Zacks Consensus Estimate for Q3 stands at $638 million.

Lastly, revenues for the Fibers segment are expected to remain flat year over year with the Zacks Consensus Estimate pegged at $221 million.

Eastman Chemical’s earnings are likely to have benefited from its cost management and pricing actions. However, a difficult global business environment and weak demand might have impacted its sales volumes in the quarter. (Read more: Eastman Chemical to Post Q3 Earnings: What's in Store?)

Eastman Chemical Company Price and EPS Surprise

 

Eastman Chemical Company Price and EPS Surprise

Eastman Chemical Company price-eps-surprise | Eastman Chemical Company Quote

Axalta Coating Systems Ltd. AXTA will report Q3 results before the bell. Our proven model does not conclusively predict an earnings beat for the company this time around. This is because it has an Earnings ESP of -1.86% and a Zacks Rank #4.

Axalta has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 24.9%.

Revenues for Axalta for Q3 is projected to decline roughly 2% year over year as the Zacks Consensus Estimate for the quarter is currently pegged at $1,116 million. The Zacks Consensus Estimate for earnings currently stands at 45 cents.

Revenues from the company’s Performance Coatings division are expected to witness a 1.9% decline year over year as the Zacks Consensus Estimate for Q3 is pegged at $741 million. The same for the Transportation Coatings unit is pegged at $375 million, indicating a 2.3% year-over-year decline.

The company’s productivity actions are likely to have contributed to its bottom line in Q3. However, headwinds from input cost inflation are likely to reflect in Q3 results, although lesser than what was witnessed in Q2.

Axalta Coating Systems Ltd. Price and EPS Surprise

 

Axalta Coating Systems Ltd. Price and EPS Surprise

Axalta Coating Systems Ltd. price-eps-surprise | Axalta Coating Systems Ltd. Quote

W. R. Grace & Co. GRA will report Q3 results ahead of the bell. Our proven model does not conclusively predict that the company is likely to beat the Zacks Consensus Estimate this quarter. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #4.

The company posted better-than-expected results in each of the last four quarters. The average earnings surprise was a positive 6.7%.

The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $490.3 million, reflecting a decrease of 0.9% from the year-ago quarter. The Zacks Consensus Estimate for earnings is currently pegged at 92 cents.

The company’s Q3 performance is likely to have been impacted by a North American FCC catalyst customer’s bankruptcy and operational shutdown, a customer-specific inventory correction in specialty catalysts and an equipment failure that led to manufacturing disruption at one of the company’s silica manufacturing plants. However, benefits of the company’s cost-reduction actions are expected to get reflected on Q3 results.

W.R. Grace & Co. Price and EPS Surprise

 

W.R. Grace & Co. Price and EPS Surprise

W.R. Grace & Co. price-eps-surprise | W.R. Grace & Co. Quote

 

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