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Cosan's (CZZ) Q3 Net Income Drops 28%, Revenues Improve

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Cosan's (CZZ) Q3 Net Income Drops 28%, Revenues Improve

Cosan's (CZZ) full-year 2018 performance will be supported by its focus on simplifying corporate structure and restructuring actions.

Cosan Limited’s CZZ adjusted net income totaled R$192 million ($48.7 million) in third-quarter 2018, down 28% from the year-ago tally of R$268 million ($84.7 million). However, net income surged 69% from R$114 million ($36.1 million) recorded in second-quarter 2018.

Revenues Increase Y/Y

In the reported quarter, Cosan’s net revenues came in at R$4,778 million ($1,211 million), reflecting year-over-year growth of 29%. On a sequential basis, the top line increased 17%.

The company operates under two business segments — Cosan S.A. and CosanLogistica S.A. While Cosan S.A includes RaizenEnergia, RaizenCombustiveis, Comgas, Moove and Cosan Corporate, CosanLogistica comprises the RumoLogistica business.

Cosan Limited Price, Consensus and EPS Surprise

Cosan Limited Price, Consensus and EPS Surprise | Cosan Limited Quote

Rise in Cost of Sales Impacts Gross Margin

Cosan’s cost of sales and services sold in the third quarter marked a 42% year-over-year rise to R$3,406 million ($863 million). It represents 71.3% of net revenues versus 64.8% witnessed in the year-ago quarter. Gross profit dipped 5% year over year to R$1,372.2 million ($347.9 million), while gross margin shrunk 650 basis points (bps) year over year to 28.7%.

Selling, general and administrative expenses flared up 1.4% year over year to R$498 million ($129 million), representing 5.6% of net revenues.

Balance Sheet

Exiting the Sep-end quarter, Cosan’s cash and cash equivalents were R$4,023 million ($981.5 million), down from R$4,073 million ($1,301 million) reported at the end of the previous quarter. Loans and borrowings declined 0.8% to R$22,155 million ($5,405 million) from R$22,343 million ($7,137.7 million) in the year-ago quarter.

Cosan will benefit from its focus on simplifying corporate structure and restructuring actions.

Share Price Performance

In the past year, Cosan has outperformed its industry with respect to price performance. The stock has lost around 4%, while the industry has slumped 50% during the same time frame.


Zacks Rank & Other Stocks to Consider

Cosan currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the same sector include CECO Environmental Corp. CECE, RBC Bearings Inc. ROLL and Mobile Mini, Inc. MINI. While CECO flaunts a Zacks Rank #1 (Strong Buy), RBC Bearings and Mobile Mini carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CECO has a long-term earnings growth rate of 15%. The stock has gained around 37% in a year’s time.

RBC Bearings has a long-term earnings growth rate of 5.9%. The company’s shares have been up 28% during the past year.

Mobile Mini has a long-term earnings growth rate of 14%. Its shares have rallied 21% in the past year.

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