It has been about a month since the last earnings report for Kronos Worldwide (KRO). Shares have lost about 4.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kronos Worldwide due for a breakout? 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 drivers.
Kronos Worldwide’s Earnings and Sales Miss Estimates in Q2
Kronos Worldwide logged a loss of 7 cents per share in second-quarter 2023, against earnings of 40 cents in the year-ago quarter. It missed the Zacks Consensus Estimate of earnings of 10 cents.
The bottom line in the reported quarter was hurt by lower income from operations resulting from higher production costs and reduced sales volumes.
Net sales fell around 22% year over year to $443.2 million on reduced sales volumes in all major markets and modestly lower average TiO2 selling prices. The top line missed the Zacks Consensus Estimate of $527.7 million.
Volumes and Pricing
TiO2 production volumes (thousand metric tons) were down 33% year over year to 89 in the second quarter. It was below our estimate of 137.3. TiO2 sales volumes (thousand metric tons) fell 26% year over year to 104 in the quarter. It fell short of our estimate of 138.8.
TiO2 segment loss was $2.3 million in the reported quarter compared with segment profit of $69.5 million a year ago. The downside was driven by reduced income from operations on lower sales volumes and higher production costs.
Average TiO2 selling prices fell 2% year over year in the quarter.
Kronos Worldwide ended the quarter with cash and cash equivalents of $169.4 million, down roughly 5% sequentially. Long-term debt was $432.4 million, flat sequentially.
Kronos said that it expects near-term demand to remain lower than historical levels. The company expects to report lower operating results for full-year 2023 on a year-over-year basis factoring in the weak demand recovery and higher production costs.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -87.5% due to these changes.
Currently, Kronos Worldwide has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Kronos Worldwide has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Kronos Worldwide belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, Eastman Chemical (EMN), has gained 2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Eastman Chemical reported revenues of $2.32 billion in the last reported quarter, representing a year-over-year change of -16.5%. EPS of $1.99 for the same period compares with $2.83 a year ago.
Eastman Chemical is expected to post earnings of $1.49 per share for the current quarter, representing a year-over-year change of -27.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -6.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Eastman Chemical. Also, the stock has a VGM Score of B.
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