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Methanex (MEOH) Earnings Miss, Revenues Beat Estimates in Q4

Zacks Equity Research

Methanex Corporation MEOH posted profits (attributable to shareholders) of $9 million or 12 cents per share in the fourth quarter of 2019, down from $161 million or $1.68 per share in the year-ago quarter.

Adjusted earnings per share (barring one-time items) in the reported quarter were 13 cents, which missed the Zacks Consensus Estimate of 26 cents.

Revenues declined 32.6% year over year to $658.7 million in the quarter. However, it surpassed the Zacks Consensus Estimate of $621 million.

Adjusted EBITDA tumbled 30.9% year over year to $136 million. The results were impacted by lower average realized methanol prices.

Methanex Corporation Price, Consensus and EPS Surprise

 

Methanex Corporation Price, Consensus and EPS Surprise

Methanex Corporation price-consensus-eps-surprise-chart | Methanex Corporation Quote

Operational Highlights

Production in the quarter totaled 2,124,000 tons, up 12.7% year over year. Total sales volume was 2,986,000 tons, up 8.5% year over year.

Average realized price for methanol was $256 per ton in the quarter, down 36.2% from $401 in the prior-year quarter.

2019 Highlights

For 2019, revenues declined 29.2% year over year to $2,784 million. The company recorded adjusted net income of $71 million or 93 cents per share, down from $556 million or $6.86 in the year-ago quarter.

Financials

For the reported quarter, cash flow from operating activities was $114 million, down 47.7% year over year. The company had cash and cash equivalents of $417 million, up 62.9% year over year.

Methanex returned $27 million to shareholders through regular dividend payouts during the fourth quarter.

Outlook

The company anticipates its Geismar 3 project to deliver strong returns on significant capital and operating cost advantages. Over the coming years, most of the large-scale capacity additions are anticipated to be in the Americas and the Middle East. Further, the company expects new non-integrated capacity additions in China to be modest on continuous restrictions by the government in China.

The company will also remain committed to execute its Louisiana growth projects and return excess cash to shareholders through dividends and share buybacks.

Price Performance

Shares of the company have lost 35.8% in the past year compared with the industry’s 29.7% decline.

 

 

Zacks Rank & Stocks to Consider

Methanex currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. DQ, Royal Gold, Inc. RGLD and Commercial Metals Company CMC.

Daqo New Energy has a projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied 51.4% in a year. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Gold has an estimated earnings growth rate of 83.5% for fiscal 2020. It currently flaunts a Zacks Rank #1. Its shares have rallied 31.6% in a year.

Commercial Metals has a Zacks Rank #2 (Buy) and a projected earnings growth rate of 20.2% for 2020. The company’s shares have rallied 22.7% in a year.

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