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Chemical Stock Q4 Earnings Slated on Jan 28: DOW, EMN & More

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·6 min read
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A few major chemical companies are gearing up to report their quarterly numbers tomorrow. Per the Zacks industry classification, the chemical industry falls under the broader Basic Materials sector. Basic Materials is among the sectors that are expected to deliver positive earnings growth in the fourth quarter. Overall earnings for the sector are projected to rise 11.1% on 2.4% lower revenues, per the latest Earnings Trends. The projections reflect an improvement from an 11.5% decline in earnings on an 8.2% drop in revenues that was witnessed in the third quarter.

An upturn in demand across major chemical end-use markets such as construction, automotive and electronics from the coronavirus-induced slowdown is likely to have aided the performance of chemical companies in the fourth quarter.

Coronavirus brought global industrial activities to a shuddering halt during the first half of 2020, squeezing demand for chemicals. Notably, disruptions associated with the pandemic hurt chemical demand in China, a major consumer, as industrial activities in the country took a blow due to lockdown restrictions. Moreover, a downturn in industrial and manufacturing activities due to lockdowns affected demand for chemicals in North America and Europe.

Nevertheless, demand started to pick up from the third quarter with the resumption of global economic activities following the easing of restrictions. The uptick in demand is being driven by recovering manufacturing and industrial activities globally and the economic rebound in China.

Notably, the automotive industry has rebounded strongly following the pandemic-driven slump riding on a revival in consumer demand. Pent-up demand and the shift toward private transportation amid the pandemic are driving new car sales globally. Automotive original equipment manufacturers have ramped up production following pandemic-led shutdowns in the second quarter. The resumption of many projects, which were earlier put on hold due to labor shortage and supply chain disruptions, also supported the rebound in the construction sector.

A rebound in major markets is likely to have spruced up demand for chemicals in the fourth quarter. Higher industrial demand is likely to have boosted sales volumes and the top line of chemical companies in the December quarter.

Moreover, benefits of strategic measures, including cost management and productivity improvement, acquisitions, and efficiency improvement and actions to raise selling prices to counter cost inflation might reflect on the fourth-quarter results of the companies in this space.

We take a sneak peek at four chemical companies that are slated to report their fourth-quarter results on Jan 28.

Dow Inc. DOW will report results before the bell. Our proven model predicts an earnings beat for the company this time around. This is because it has an Earnings ESP of +13.50% and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for revenues for the fourth quarter for Dow is currently pegged at $9,696 million. The consensus estimate for earnings is 66 cents.

The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 18%.

Dow is expected to have benefited from cost synergy savings and productivity actions. The company is also likely to have gained from higher demand for its materials across healthcare and packaging markets, and improved demand across furniture & bedding, appliances, packaging, construction and automotive end markets. However, plant turnaround costs are likely to have impacted its fourth-quarter performance. (Read more: Dow Gears Up for Q4 Earnings: What's in the Offing?)

Dow Inc. Price and EPS Surprise

Dow Inc. Price and EPS Surprise
Dow Inc. Price and EPS Surprise

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

Celanese Corporation CE will report results after the closing bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -0.40% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for revenues for the fourth quarter is currently pegged at $1,392 million. The consensus estimate for earnings is $1.70.

The company beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing the same once. It has a trailing four-quarter earnings surprise of roughly 8.6%, on average.

The benefits of the company’s productivity and operational improvement actions, investments in high-return organic projects and strategic acquisitions are likely to get reflected on its fourth-quarter performance. It is also likely to have gained from a recovery in demand across its end markets. However, it is likely to have faced headwinds stemming from pricing pressure and maintenance outages. (Read more: Celanese to Report Q4 Earnings: What's in the Offing?)

Celanese Corporation Price and EPS Surprise

Celanese Corporation Price and EPS Surprise
Celanese Corporation Price and EPS Surprise

Celanese Corporation price-eps-surprise | Celanese Corporation Quote

Eastman Chemical Company EMN will report results after the closing bell. Our proven model predicts an earnings beat for the company this time around. This is because it has an Earnings ESP of +16.17% and a Zacks Rank #2.

Eastman Chemical beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missed once. For this timeframe, the company delivered an earnings surprise of 4.9%, on average.

The Zacks Consensus Estimate for revenues for the fourth is currently pegged at $2,148 million. The consensus estimate for earnings stands at $1.52.

The company’s earnings are likely to have benefited from its productivity and cost-cutting actions, growth in high-margin innovation products and a recovery in demand from the coronavirus-induced slowdown. (Read more: What's in Store for Eastman Chemical in Q4 Earnings?)

Eastman Chemical Company Price and EPS Surprise

Eastman Chemical Company Price and EPS Surprise
Eastman Chemical Company Price and EPS Surprise

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

Olin Corporation OLN will report results after the closing bell. Our proven model predicts an earnings beat for the company this time around. This is because it has an Earnings ESP of +80.77% and a Zacks Rank #2.

The company beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missed twice. In this timeframe, it delivered an average negative surprise of around 11.9%.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1,461 million. The consensus estimate for earnings stands at a loss of 8 cents.

Higher pricing for chlorine, epoxy resins, ethylene dichloride, bleach and chlorinated organics is expected to have supported Olin’s margins in the fourth quarter. Benefits of actions to improve cost structure and efficiency, and drive productivity are also expected to get reflected on its results.

Olin Corporation Price and EPS Surprise

Olin Corporation Price and EPS Surprise
Olin Corporation Price and EPS Surprise

Olin Corporation price-eps-surprise | Olin Corporation Quote

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Dow Inc. (DOW) : Free Stock Analysis Report

Eastman Chemical Company (EMN) : Free Stock Analysis Report

Celanese Corporation (CE) : Free Stock Analysis Report

Olin Corporation (OLN) : Free Stock Analysis Report

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