Chemical Stock Q3 Earnings Slated on Oct 25: GRA, MEOH, POL

A few chemical companies are scheduled to report their quarterly numbers on Oct 25.  Per the Zacks Industry classification, the chemical industry is grouped under the broader Basic Materials sector. Overall third-quarter earnings for the sector are projected to decline 9.3% while revenues are expected to increase 9.1%, per the latest Earnings Preview.

The chemical industry has enjoyed a positive run this year, helped by an upswing in the world economy and continued strength across major end-use markets such as construction, electronics and automotive.

Chemical companies continue to shift their focus on attractive, growth markets in an effort to whittle down their exposure to other businesses that are grappling with weak demand. Moreover, they remain actively focused on mergers and acquisitions to diversify and shore up growth.

Notwithstanding a few headwinds including the impact of the devastating Hurricane Harvey, chemical companies are expected to continue the earnings momentum witnessed in the second quarter into the third quarter. This is because the fundamental driving factors remained firmly in place.

Strategic measures including productivity improvement, pricing actions, portfolio restructuring and earnings-accretive acquisitions are expected to drive the performance of chemical makers in the third quarter. Cost-cutting measures and productivity improvement actions by chemical companies should continue to yield industry-wide margin improvements. Synergies from acquisitions should lend support to earnings in the third quarter.  

We take a sneak peek at three chemical companies that are gearing up to report their third-quarter results this Wednesday.

W. R. Grace & Co. GRA will report earnings numbers ahead of the bell. The company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 81 cents. The company carries a Zacks Rank #5 (Strong Sell). We caution against Sell-rated (Zacks Rank #4 or 5) stocks going into the earnings announcement. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 4.8%.

The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $402.5 million, reflecting a decline of 0.5% from the year-ago quarter.

The company, on its second-quarter earnings call, said that it expects overall sales to grow in the low-to-mid single digits year over year in the third quarter. It also expects earnings per share to rise more than 10%, factoring in the impact of improving gross profit, insurance recoveries and lower effective tax rates. While raw material inflation remains a headwind, the company should gain from the polyolefin catalyst acquisition, strong demand in its polyolefins business and productivity actions.

W.R. Grace & Co. Price and EPS Surprise

 

W.R. Grace & Co. Price and EPS Surprise | W.R. Grace & Co. Quote

Methanex Corporation MEOH, which will report after the close, beat estimates in three of the trailing four quarters, delivering an average positive earnings surprise of 71.6%.

The stock has an Earnings ESP -22.94% as the Most Accurate estimate stands at 42 cents while the Zacks Consensus Estimate is pegged at 55 cents. While the stock carries a Zacks Rank #2 (Buy), its negative ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Methanex should gain from healthy demand fundamentals for methanol. However, methanol prices remain under pressure, affecting the company’s earnings. The company expects EBITDA to decline sequentially in the third quarter as average methanol prices are expected to be lower in the quarter on a sequential comparison basis.

Methanex Corporation Price and EPS Surprise

 

Methanex Corporation Price and EPS Surprise | Methanex Corporation Quote

PolyOne Corporation POL will report before the bell. The company has an Earnings ESP of -2.52% as the Most Accurate estimate stands at 53 cents while the Zacks Consensus Estimate is pegged at 55 cents. The stock carries a Zacks Rank #4 (Sell).

PolyOne beat estimates in three of the trailing four quarters, delivering an average positive surprise of 4.7%.

The Zacks Consensus Estimate for revenues for PolyOne for the third quarter stands at $788.2 million, suggesting a decline of 6.6% from the year-ago quarter.

The Zacks Consensus Estimate for sales for the company’s Color, Additives and Inks unit is pegged at $216 million, reflecting an increase of 10% on a year-over-year basis. The same for the Specialty Engineered Materials division stands at $155 million, representing year-over-year growth of 6%.

Moreover, the Zacks Consensus Estimate for Performance Products and Solutions division sales stands at $177 million, reflecting a rise of 3.5% from the year-ago quarter.

PolyOne is exposed to headwinds from raw material cost inflation, which may weigh on its sales and earnings in the third quarter. However, the company is gaining from its acquisitions and strategic investments in commercial resources that are contributing to its results. The company should also benefit from the acquisition of specialty inks maker, Rutland Holding Company. The acquisition expands PolyOne’s portfolio of specialty color, additives and inks solutions.

PolyOne Corporation Price and EPS Surprise

 

PolyOne Corporation Price and EPS Surprise | PolyOne Corporation Quote

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