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Chemical Stock Earnings Slated on Jul 25: APD, EMN, AXTA, GRA

Anindya Barman

A few chemical companies are gearing up to report their quarterly numbers on Jul 25. Per the Zacks Industry classification, the chemical industry falls under the broader Zacks Basic Materials sector. The Q2 earnings picture for the Basic Materials sector looks glum. The sector is among the Zacks sectors that are expected to see a double-digit decline in earnings in the June quarter. Overall earnings for the sector are projected to fall 34.7% on 10.6% lower revenues, per the latest Earnings Preview.

Chemical companies are expected to face some demand weakness in Q2. Trade conflict has led to a slowdown in industrial activities across Asia and Europe, hurting demand for chemicals and plastics.

Chemical makers are seeing weak demand in China associated with the U.S.-China trade war amid a slowing Chinese economy. Notably, the trade friction has created a slowdown in demand in the automotive market (a major chemical end-use market) in China.

Companies in the chemical space also face headwinds from a spike in costs of raw materials. Some of these companies are also exposed to challenges from elevated logistics costs.

Nevertheless, chemical makers should benefit 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. These actions will likely support their margins in Q2.

Moreover, chemical companies remain actively focused on mergers and acquisitions to diversify and drive growth. Synergies from acquisitions should also lend support to earnings in the June quarter.

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

Air Products and Chemicals, Inc. APD will report fiscal Q3 earnings numbers ahead of the bell. It has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.14. The stock carries a Zacks Rank #2 (Buy), but its ESP makes our surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missed once and delivered in-line results on the other occasion. In this timeframe, the company delivered an average positive surprise of around 1.9%.

The Zacks Consensus Estimate for revenues for Air Products for fiscal Q3 is currently pegged at $2,293 million, suggesting a rise of roughly 1.5% from the year-ago reported figure.

The Zacks Consensus Estimate for revenues for the company’s Industrial Gases — Americas segment is currently pegged at $1,001 million, calling for an increase of 5.5% year over year. The consensus mark for the segment’s operating income is pegged at $261 million, indicating growth of 10.1% year over year.

The Zacks Consensus Estimate for revenues in the Industrial Gases — Asia segment is pegged at $706 million, implying a 13.1% rise from the year-ago reported figure. Operating income in the segment is projected at $227 million, reflecting a year-over-year increase of 22%.

The Zacks Consensus Estimate for revenues in the Industrial Gases — EMEA segment stands at $523 million, reflecting a decline of 6.8% year over year. The Zacks Consensus Estimate for operating income is pegged at $127 million, which indicates a rise of roughly 6.7% year over year.

The consensus mark for revenues in the Industrial Gases — Global segment is pegged at $69 million, which shows a decline of 31.7% year over year. The same for the segment’s operating income stands at $1.62 million, which indicates a drop of 92% year over year.

While currency is expected remain a headwind, Air Products is likely to gain from higher volumes, pricing and productivity initiatives in fiscal Q3. (Read more: Air Products to Post Q3 Earnings: What's in the Cards?)

Air Products and Chemicals, Inc. Price and EPS Surprise

 

Air Products and Chemicals, Inc. Price and EPS Surprise

Air Products and Chemicals, Inc. price-eps-surprise | Air Products and Chemicals, Inc. Quote

Eastman Chemical Company EMN will report Q2 results after the closing bell. It has an Earnings ESP of -1.90% as the Most Accurate Estimate is currently pegged at $2.05 while the Zacks Consensus Estimate stands at $2.09. The company has a Zacks Rank #4 (Sell), which we caution against going into the earnings announcement.

Eastman Chemical beat the Zacks Consensus Estimate in two of the trailing four quarters while missed twice, delivering an average negative surprise of roughly 4.3%.

The Zacks Consensus Estimate for Q2 revenues for Eastman Chemical is currently pegged at $2,540 million, indicating a roughly 3.1% year-over-year decline.

Revenues from Eastman Chemical’s Additives and Functional Products division are expected to witness a 5.3% decline year over year as the Zacks Consensus Estimate for Q2 is pegged at $892 million. Advanced Materials unit’s revenues are expected to remain flat year over year as the Zacks Consensus Estimate for Q2 is $729 million.

Revenues for the Chemical Intermediates segment are projected to decline 6.1% from the year-ago reported figure as the Zacks Consensus Estimate stands at $666 million.

Lastly, the Fibers segment is expected to witness a 1.7% decline in revenues year over year as the Zacks Consensus Estimate is pegged at $237 million for Q2.

Eastman Chemical is expected to gain from its cost management actions, high margin products and synergies of acquisitions amid challenges including a difficult global business environment, weak demand in China and Europe and currency pressures. (Read more: What's in Store for Eastman Chemical in Q2 Earnings?)

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 Q2 results before the bell. The company is expected to come up with a positive earnings surprise as it has an Earnings ESP of +3.79% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Axalta has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 19.6%.

Revenues for Axalta for Q2 is projected to decline roughly 2.1% year over year as the Zacks Consensus Estimate for the quarter is currently pegged at $1,187 million.

Axalta is exposed to headwinds from input cost inflation. Moreover, the company expects challenges from softer industrial coatings demand across North America and Europe, and lower automotive production rates in major markets. Nevertheless, the company should gain from productivity and price increase actions in the to-be-reported quarter.

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 Q2 results ahead of the bell. It has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.14. The stock carries a favorable Zacks Rank #3 (Hold), but its ESP makes surprise prediction difficult.

The company posted better-than-expected results in each of the last four quarters. The average earnings surprise was a positive 9.8%.

The Zacks Consensus Estimate for revenues for W. R. Grace for the to-be-reported quarter stands at $504 million, reflecting an increase of 3.8% from the year-ago reported figure.

While the company faces headwinds from cost inflation and currency, it is expected to benefit from the Polyolefin Catalysts acquisition, continued pricing strength and strong demand for its products across its markets.

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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