A month has gone by since the last earnings report for LyondellBasell (LYB). Shares have added about 4.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is LyondellBasell 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 drivers.
LyondellBasell's Q2 Earnings Beat, Sales Lag Estimates
LyondellBasell posted profits of $314 million or 94 cents per share in second-quarter 2020, down from $1,003 million or $2.70 in the year-ago quarter.
Barring one-time items, adjusted earnings came in at 71 cents per share that beat the Zacks Consensus Estimate of 61 cents.
Revenues fell 38.7% year over year to $5,546 million in the reported quarter. The figure also trailed the consensus mark of $5,775.6 million.
Consolidated EBITDA fell 51.9% year over year to $760 million.
In the Olefins & Polyolefins — Americas division, EBITDA fell 60.9% year over year to $248 million. Polyolefin results dropped around $185 million due to lower margins, which was partly offset by a modest rise in polyethylene volume.
The Olefins & Polyolefins — Europe, Asia, International segment witnessed a fall in EBITDA of 44.1% year over year to $185 million. Margins declined due to lower ethylene prices, which was partly offset by lower feedstock costs. Volumes declined due to lower demand.
The Advanced Polymer Solutions (APS) segment posted a loss of $44 million compared with EBITDA of $120 million in the year-ago quarter. Compounding & Solutions results declined $85 million mainly due to lower automotive demand.
EBITDA in the Intermediates and Derivatives segment fell 77.5% on a year-over-year basis to $101 million.
EBITDA in the Refining segment came at $165 million in the reported quarter against a loss of $66 million in the year-ago quarter. Crude throughput fell 24,000 barrels per day due to unplanned maintenance and rate reduction in response to lower demand.
The Technology segment’s EBITDA fell to $112 million in the reported quarter, up 4.7% year over year. Lower licensing revenues were more than offset by higher catalyst volumes and margins.
As of Jun 30, LyondellBasell had cash and liquid investments of $3 billion.
In the second quarter, the company paid out dividends worth $350 million. It also had 334 million common shares outstanding as of Jun 30.
LyondellBasell stated that demand for its products is improving with increased economic activity. In response to increased demand, the company raised operating rates and prices for North American polyethylene exports to Asia. The company expects Refining and Oxyfuels & Related Products businesses demand to improve with increased mobility and reductions in fuel inventories. Also, the Advanced Polymer Solutions unit is gaining from rebounding demand for its plastics used in automotive manufacturing.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.72% due to these changes.
Currently, LyondellBasell has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 A. 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. Notably, LyondellBasell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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