MP Materials (MP) to Report Q2 Earnings: What to Expect?
MP Materials Corp. MP is scheduled to report second-quarter 2023 results after the closing bell on Aug 3.
Q2 Estimates
The Zacks Consensus Estimate for second-quarter revenues is pegged at $60.4 million, suggesting a 58% year-over-year decline. The consensus mark for earnings is pegged at 7 cents per share, indicating a 84% plunge from the second-quarter 2022 reported figure. The consensus estimate for earnings for the to-be-reported quarter has remained unchanged over the past 30 days.
Q1 Results
In the last reported quarter, MP Materials reported year-over-year decline in both revenues and earnings. The company however beat the Zacks Consensus Estimate on both the metrics.
MP Material’s earnings have outpaced the consensus estimate in each of the trailing four quarters, the average surprise being 70.4%.
MP Materials Corp. Price and EPS Surprise
MP Materials Corp. price-eps-surprise | MP Materials Corp. Quote
Factors to Note
In the first quarter of 2023, rare earth oxide (REO) sales and production volumes were 10,215 and 10,671 MT, respectively. Production and sales volumes were down 1% and 13% compared to the last year quarter, respectively. Timing of shipments impacted volumes during the quarter.
The company normally experiences a timing lag between production and sales, which leads to volatility in its operation results between quarters. Production is impacted by the timing of scheduled outages of production facilities for maintenance, which typically occur in the second and fourth quarter. The company had earlier stated that as it is currently engaged in commissioning activities for Stage II, significant volumes of REO produced from Stage I operations will be retained for separation rather than sold as concentrate
MP’s sales volumes are thus expected to have been lower in the to-be-reported second quarter.
Revenues in the first quarter of 2023 bore the impact of a 32% decrease in the realized price of REO in concentrate due to softer pricing environment for rare earth products as compared to the prior year-period when prices had peaked.
During the quarter, rare earth prices had lost steam mainly on the prospects of rising supply with new mining initiatives globally. The combination of weak prices and lower sales volumes are expected to have weighed on the company’s top-line performance in the second quarter.
Higher raw material and logistic costs are likely to have weighed on the performance in the quarter. The company has been incurring higher production costs as it is expanding its workforce and preparing its facilities to support separated rare earth (Stage II) production. Other general and administrative costs, as well as advanced projects and development costs, are also anticipated to have dented margins.
What Our Zacks Model Indicates
Our proven model does not conclusively predict an earnings beat for MP Materials this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today's Zacks #1 Rank stocks here.
You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for MP Materials is -42.86%.
Zacks Rank: MP currently carries a Zacks Rank #4 (Sell).
Price Performance
MP Materials’ shares have fallen 28.5% in the past year against the industry’s 8.4% growth.
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Stocks to Consider
Here are some companies in the basic materials space, which according to our model, have the right combination of elements to post an earnings beat this quarter:
Livent Corporation LTHM, scheduled to release earnings on Aug 3, has an Earnings ESP of +2.43% and sports a Zacks Rank of 1.
The Zacks Consensus Estimate for LTHM’s earnings for the second quarter is currently pegged at 46 cents per share.
Ecolab Inc. ECL, slated to release earnings on Aug 1, has an Earnings ESP of +0.50% and a Zacks Rank of 2.
The Zacks Consensus Estimate for ECL’s second-quarter earnings is pegged at a profit of $1.21 per share.
Axalta Coating Systems Ltd. AXTA, which is slated to release earnings on Aug 1, has an Earnings ESP of +6.02% and a Zacks Rank of 2.
The consensus estimate for AXTA’s earnings for the second quarter is currently pegged at 39 cents per share.
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Ecolab Inc. (ECL) : Free Stock Analysis Report
MP Materials Corp. (MP) : Free Stock Analysis Report
Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
Livent Corporation (LTHM) : Free Stock Analysis Report
