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Chemical Stock Q1 Earnings Due on Apr 25: AXTA, MEOH & More

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A few chemical companies are lined up to report their quarterly numbers on Apr 25.  

As 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 rack up the strongest gains in Q1. Earnings for the sector are projected to surge 41% in Q1 while revenues are expected to go up 19.8%, per the latest Earnings Preview.

The chemical industry is gaining momentum on the back of a resurgent global economy and strength across major end-use markets such as construction and automotive. Improving fundamentals in the energy space — another key market for chemicals — has also been a significant tailwind for the chemical industry. A rebound in crude oil prices led to a recovery in demand for chemicals in the energy market.

Notwithstanding a few headwinds including raw material cost inflation, chemical companies are expected to continue the earnings momentum in the March quarter as the fundamental driving factors remain firmly in place.

Cost-cutting measures and productivity improvement actions by chemical companies should continue to reap industry-wide margin improvements in Q1. Moreover, a number of chemical makers are taking appropriate pricing actions to offset higher raw materials costs, which should also provide margin benefits. Synergies from acquisitions should also lend support to earnings in the March quarter.  

Moreover, President Donald Trump’s business-friendly tax reform contributed to the impressive performance of the chemical industry in Q4 and would remain a major tailwind in Q1. The newly introduced tax reform significantly reduces the corporate tax rate from 35% to 21%, which is a positive for chemical stocks.

We take a sneak peek at four chemical companies that are gearing up to report their Q1 results tomorrow.

Axalta Coating Systems Ltd. AXTA will report its earnings numbers ahead of the bell. The company has an Earnings ESP of -3.75% as the Most Accurate estimate stands at 22 cents while the Zacks Consensus Estimate is pegged at 23 cents. It has a Zacks Rank #5 (Strong Sell), which we caution against going into the earnings announcement. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

In the last four quarters, the company delivered better-than-expected results thrice and missed once. The average earnings surprise was a positive 4.1%.

The Zacks Consensus Estimate for revenues stands at $1,133 million, reflecting an increase of 11.8% from the year-ago quarter.

The Zacks Consensus Estimate for sales of the company’s Performance Coatings unit is pegged at $720 million, reflecting an increase of 22.9% on a year-over-year basis. The same for the Transportation Coatings division stands at $436 million, representing year-over-year growth of 3.6%.

While the company remains exposed to headwinds from higher raw material costs, it should gain from its cost-reduction actions, contributions from acquisitions and favorable pricing 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

Methanex Corporation MEOH will report its results after the bell. The company is expected to come up with a positive earnings surprise as it has an Earnings ESP of +4.58% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Methanex topped the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 9.1%.

Methanex is expected to gain from healthy demand fundamentals for methanol, which is driven by both traditional derivatives and energy-related applications in Asia, particularly in China. Moreover, higher methanol prices are likely to boost its margins in Q1.

Methanex Corporation Price and EPS Surprise

 

Methanex Corporation Price and EPS Surprise | Methanex Corporation Quote

Kraton Corporation KRA will report its results after the bell. It has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 62 cents. The company has a Zacks Rank #4 (Sell), which we caution against going into the earnings announcement.

Kraton topped the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 30.7%.

The Zacks Consensus Estimate for revenues stands at $499 million, reflecting an increase of 8.9% from the year-ago quarter.

Kraton is expected to benefit from positive demand trends, continued strong momentum in its Polymer segment and volume growth and margin recovery in its Chemical segment. It should also gain from its cost-reduction initiatives. The company realized roughly $45 million of its $70 million cost reduction target for its Polymer segment at the end of 2017 and expects to realize a major portion of the remaining savings this year.

Kraton Corporation Price and EPS Surprise

 

Kraton Corporation Price and EPS Surprise | Kraton Corporation Quote

W. R. Grace & Co. GRA, which is expected to report its results before the bell, has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 71 cents. The company currently carries a Zacks Rank #2, but its 0.00% ESP makes surprise prediction difficult.

The company posted a positive earnings surprise in each of the trailing four quarters, delivering an average earnings surprise of 6.5%.

The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $412 million, reflecting a year-over-year rise of 3.5%.

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

 

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

 

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