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Quaker Chemical (KWR) Stock Down 9.8% Since Q4 Earnings Miss

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Quaker Chemical Corporation's KWR shares are down since the company came up with its fourth-quarter 2021 results, wherein both earnings and revenues missed the respective Zacks Consensus Estimate.

The Pennsylvania-based company faced headwinds from a significant spike in raw material costs and supply-chain and logistics cost pressures in the reported quarter. Its volumes were also hurt by constrained demand in the automotive market and delayed shipments due to supply-chain disruptions. Its shares fell 2.2% last Friday and are also down roughly 9.8% since the fourth-quarter earnings announcement.

Earnings and Revenues Discussion

Quaker Chemical recorded profits of $18.1 million or $1.01 per share in the fourth quarter, down from $48.5 million or $2.72 a year ago.

Barring one-time items, earnings came in at $1.29 per share for the reported quarter. It missed the Zacks Consensus Estimate of $1.62.

Net sales rose around 16% year over year to $447 million in the quarter. It, missed the Zacks Consensus Estimate of $448.8 million. Higher selling price and product mix as well as additional net sales from acquisitions were partly offset by lower sales volumes and the unfavorable impact from foreign currency swings. The increase in selling price and product mix was mainly attributable to the company’s actions to implement broad price increases in an effort to offset raw material cost inflation and supply-chain and logistics cost pressures.

FY21 Results

Earnings (as reported) for full-year 2021 were $6.77 per share compared with $2.22 per share a year ago. Revenues were $1,761.2 million for the full year, up around 24% year over year.

Financials

The company ended 2021 with cash and cash equivalents of around $165.2 million, down roughly 9% year over year. Long-term debt was $836.4 million, down around 1% year over year.

Net operating cash flow was $48.9 million for 2021, down from $178.4 million a year ago.

Outlook

Quaker Chemical said that it is well placed to outperform market growth rates and deliver value-added solutions and services to customers. It is seeing healthy demand in most of its end markets. However, it anticipates raw material cost pressures and supply-chain disruptions to continue throughout this year. The company is implementing further price actions and is actively managing its cost structure to mitigate the impact of the ongoing cost pressures. It expects these measures to contribute to the margin recovery as it progresses throughout 2022.

Price Performance

Quaker Chemical’s shares are down 35.3% in the past year compared with industry’s 14.2% decline.

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Zacks Rank & Key Picks

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

Better-ranked stocks worth considering in the basic materials space include Cabot Corporation CBT, AdvanSix Inc. ASIX and Commercial Metals Company CMC.

Cabot, carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 15.5% for the current fiscal year. The Zacks Consensus Estimate for CBT for the current fiscal year has been revised 7.8% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 21.6%. CBT shares have popped around 44% in a year.

AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 14.6% for the current year. ASIX's consensus estimate for current-year earnings has been revised 9.8% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 39% in a year.

Commercial Metals, carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has gained around 32% in a year.


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