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Why Is Chemours (CC) Up 16.5% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Chemours (CC). Shares have added about 16.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Chemours 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 catalysts.

Chemours’ Earnings and Revenues Surpass Estimates in Q2

Chemours logged a profit of $24 million or 15 cents per share in the second quarter of 2020, down from a profit of $96 million or 57 cents per share a year ago.

Adjusted earnings were 18 cents per share for the quarter, which surpassed the Zacks Consensus Estimate of 9 cents.

Total revenues fell around 22% year over year to $1,093 million. The company saw lower volumes across all segments in the quarter. However, revenues beat the Zacks Consensus Estimate of $1,077.5 million.

Segment Highlights

Revenues in the Fluoroproducts segment fell roughly 26% year over year to $523 million in the reported quarter. The decline was caused by the impacts of the coronavirus outbreak on global automotive original equipment manufacturers and industrial end-markets.

Revenues in the Chemical Solutions unit were $82 million, down 37% year over year. The company saw lower volumes in the quarter mainly due to coronavirus-related mine closures. Average prices also fell due to regional customer mix.

Revenues in the Titanium Technologies division were $488 million, down around 14% from the prior-year quarter. The decline was attributable to lower volumes resulting from weaker demand, mainly in Europe, Latin America and Asia. Average selling prices also fell on a year-over-year basis.

Financials

Chemours ended the quarter with cash and cash equivalents of $1,031 million, up roughly 64% year over year. Long-term debt was $4,327 million, up around 3% year over year.

Cash provided by operating activities was $111 million in the quarter while free cash flow was $50 million.

Outlook

Chemours noted that although its outlook for the second half is improving, it remains uncertain. The company remains focused on executing its short-term response plan and long-term strategy amid the uncertainties. The company aims to cut costs by $160 million and capital expenditure by roughly $125 million in 2020.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -7.05% due to these changes.

VGM Scores

Currently, Chemours has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Chemours has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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