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It has been about a month since the last earnings report for Olin (OLN). Shares have added about 23.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Olin due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Olin's Earnings Miss Estimates in Q4, Revenues Beat
Olin posted a loss of $33 million or 21 cents per share in fourth-quarter 2020 compared with a loss of $77.2 million or 49 cents per share a year ago.
Excluding one-time items, adjusted loss for the quarter was 12 cents per share, wider than the Zacks Consensus Estimate of a loss of 8 cents.
The company’s revenues went up roughly 19% year over year to $1,654.1 million in the quarter. It also surpassed the Zacks Consensus Estimate of $1,460.6 million. The company saw higher sales across its segments in the fourth quarter. It benefited from higher ECU (Electrochemical Unit) pricing in the quarter.
Chlor Alkali Products and Vinyls: Revenues at the division rose roughly 4% year over year to $793.7 million in the reported quarter as lower volumes were more than offset by higher ECU pricing, especially ethylene dichloride and chlorine.
Epoxy: Revenues at the division went up around 11% year over year to $519.8 million on higher wind energy and aromatics volumes.
Winchester: Revenues more than doubled year over year to $340.6 million on increased commercial and military sales as well as higher commercial ammunition pricing. The unit started operating the Lake City U.S. Army Ammunition plant on Oct 1. The segment also achieved record quarterly earnings in the fourth quarter.
Loss (as reported) for full-year 2020 was $6.14 per share, compared with a loss of 7 cents per share a year ago. Revenues dropped around 6% year over year to roughly $5,758 million for the full year.
Olin ended 2020 with cash and cash equivalents of $189.7 million, down roughly 14% year over year. Long-term debt was $3,837.5 million at the end of the year, up around 15% year over year.
Olin expects adjusted EBITDA for the first quarter of 2021 to improve on a sequential comparison basis.
The company expects its recent price hike announcements for chlorine, epichlorohydrin, epoxy resins, bleach, ethylene dichloride and chlorinated organics to favorably contribute to its Chemicals businesses in the first quarter. The company envisions some volume offsets as it is selectively selling less into poor quality markets. Olin also sees its productivity actions to positively contribute to first-quarter results. The company also expects higher performance for its Winchester business in 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 113.33% due to these changes.
Currently, Olin has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 Olin has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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