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Chemical Stock Earnings Slated for Oct 25: PX, EMN & AXTA

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Chemical Stock Earnings Slated for Oct 25: PX, EMN & AXTA

Investors should check these chemical stocks before their quarterly results as the industry is expected to sustain the momentum in Q3.

A few chemical companies are lined up to report quarterly numbers on Oct 25. The chemical industry maintains its good run in 2018 on sustained demand strength across major end-use markets such as construction and automotive. Improving fundamentals in the energy space, driven by an upswing in crude oil prices bode well for the industry.

A rebound in crude oil prices led to a recovery in demand for chemicals in the energy market and a favorable pricing environment for chemical products as their prices essentially move in tandem with oil prices.

Companies in the chemical space face headwinds from a spike in costs of raw materials as a result of short supply partly due to production outages and plant shutdowns. However, strategic measures including productivity improvement, pricing hike actions and portfolio restructuring are likely to drive the performance of chemical makers in the impending quarter. Cost-cutting measures by these companies are likely to improve industry-wide margin. Synergies from acquisitions will also boost earnings. Moreover, President Donald Trump’s business-friendly tax reform is a positive for U.S. chemical stocks.

Per the Zacks Industry classification, the chemical industry is grouped under the broader Basic Materials sector, which is among the Zacks sectors that are expected to record the strongest results in Q3. Earnings for the sector are projected to improve 33.5%, while revenues are expected to rise 14.3%, per the latest Earnings Preview.

We take a look at three chemical companies that are slated to report their results tomorrow.

Praxair Inc. PX, which is expected to report Q3 results on Oct 25, has an Earnings ESP of +0.49%. The Zacks Consensus Estimate is pegged at $1.70. However, the company has a Zacks Rank #4 (Sell), which coupled with a positive ESP, makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Praxair surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 3.5%.

Revenues for Q3 are projected to rise 3.8% year over year, as the Zacks Consensus Estimate is currently pegged at $3,034 million.

The Zacks Consensus Estimate for the company’s North America segment’s revenues is $1,592 million, reflecting an increase of 4.9% year over year. The same for the South America segment is $341 million, reflecting an expected decline of 12.3% year over year. Moreover, the Zacks Consensus Estimate for revenues in the Asia segment is pegged at $494 million, reflecting a rise of 9.5% year over year. Per the Zacks model, the Europe segment is expected to log sales of $432 million, depicting a rise of 6.1% year over year.

Praxair is expected to benefit from pricing cost management, prudent investments in project backlog, as well as a focused and disciplined capital-allocation process in Q3. For the North America segment, Praxair will gain from rising demand for gases for industrial use, especially in the metals, chemicals, downstream energy and manufacturing end markets. Performance in the South America segment continues to lag the rest of the world due to sluggish economic conditions in Brazil. (Read more: Praxair to Report Q3 Earnings: What's in the Cards?)

Praxair, Inc. Price and EPS Surprise

 

Praxair, Inc. Price and EPS Surprise | Praxair, Inc. Quote

Eastman Chemical Company EMN will report Q3 results after the closing bell. The company is expected to come up with a positive earnings surprise as it has an Earnings ESP of +0.57% and also holds a Zacks Rank #3 (Hold), which makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eastman Chemical topped the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings beat of roughly 16.8%.

Revenues for Eastman Chemical for Q3 are projected to rise roughly 2.8% year over year. The Zacks Consensus Estimate for the quarter is currently pegged at $2,535 million.

Revenues in the Eastman Chemical’s Additives and Functional Products division is anticipated to witness a 1.5% rise year over year as the Zacks Consensus Estimate for Q3 is pegged at $899 million.

Advanced Materials unit’s revenues are expected to increase 7% year over year as the Zacks Consensus Estimate for Q3 is pegged at $691 million.

Revenues in the Chemical Intermediates segment are projected to fall 1% from the year-ago quarter's figure as the Zacks Consensus Estimate for Q3 stands at $689 million.

Moreover, the Fibers segment is expected to witness a year over year rise of 7% in revenues as the Zacks Consensus Estimate is pegged at $240 million for the third quarter.

Eastman Chemical’s high margin products and aggressive cost-management actions are likely to boost earnings. The company should gain from sustained growth of its high margins specialty products. However, the company is exposed to raw material cost inflation, which is weighing on its margins. (Read more: Can Eastman Chemical Sustain Earnings Streak in Q3?)

Eastman Chemical Company Price and EPS Surprise

 

Eastman Chemical Company Price and EPS Surprise | Eastman Chemical Company Quote

Axalta Coating Systems Ltd. AXTA will report its Q3 earnings numbers before the opening bell. The company has an Earnings ESP of -1.90%. The Zacks Consensus Estimate is pegged at 29 cents. Moreover, it has a Zacks Rank #5 (Strong Sell), which we caution against going into the earnings announcement.

In the last three of the four trailing quarters, the company delivered better-than-expected results. The average earnings surprise was a positive 11.5%.

The Zacks Consensus Estimate for revenues stands at $1,156 million, reflecting an increase of 5.5% from the year-ago quarter.

The Zacks Consensus Estimate for total sales of the company’s Performance Coatings unit is pegged at $749 million, reflecting an expected decline of 4.6% on a sequential comparison basis. The same for the Transportation Coatings division is pegged at $398 million, representing an expected sequential decline of 5.7%.

While the company is exposed to headwinds from higher raw material costs, it should gain from cost-reduction and pricing actions as well as contributions from acquisitions 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. Quote

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