A month has gone by since the last earnings report for Kronos Worldwide (KRO). Shares have added about 2.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kronos Worldwide due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Kronos Worldwide’s Earnings & Sales Beat Estimates in Q2
Kronos Worldwide logged a profit of $18.6 million or 16 cents per share in second-quarter 2020, down from $29.5 million or 25 cents per share in the year-ago quarter. Earnings, however, beat the Zacks Consensus Estimate of 4 cents.
The bottom line in the reported quarter was impacted by lower sales volumes, lower average TiO2 selling prices, increased raw materials and other production costs.
Net sales fell 20% year over year to $386 million, hurt by lower sales volumes and lower average TiO2 selling prices. However, the figure beat the Zacks Consensus Estimate of $369.9 million.
Volumes and Pricing
The company’s TiO2 sales volumes fell 22% year over year due to lower volumes in all major markets mainly on account of lower demand associated with the coronavirus pandemic. TiO2 production volumes were down 2% year over year in the reported quarter.
Average TiO2 selling prices were down 1% year over year in the reported quarter.
Kronos Worldwide ended the quarter with cash and cash equivalents of $341.4 million, up 3.9% year over year. Long-term debt was $445 million, down 1.6% year over year.
Net cash provided by operating activities was $18.1 million for the six months ended Jun 30, 2020.
Kronos Worldwide said that the coronavirus pandemic impacted its operations through lower demand for the products, resulting in reduced sales and earnings for the second quarter.
The company expects the U.S. and global gross domestic product to be considerably impacted for an indeterminate period. Factoring in the impacts of the pandemic on the world economy, it envisions its sales volumes and earnings to be lower than the prior periods for the balance of 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 57.14% due to these changes.
At this time, Kronos Worldwide has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Kronos Worldwide has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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