Ferro (FOE) Earnings Surpass Estimates in Q3, Revenues Lag

Ferro Corporation FOE posted a profit (attributable to common shareholders) of $12.8 million or 16 cents per share for third-quarter 2019, down around 20% from $16.1 million or 19 cents a year ago.

Barring one-time items, earnings were 35 cents per share for the quarter, topping the Zacks Consensus Estimate of 29 cents.

The company recorded revenues of $365.7 million for the quarter, down around 7% year over year. The top line was impacted by reduced volumes and mix as well as unfavorable product pricing and currency swings. Sales also fell short of the Zacks Consensus Estimate of $371.3 million. The company saw lower sales across its segments in the quarter.

Ferro Corporation Price, Consensus and EPS Surprise

 

Ferro Corporation Price, Consensus and EPS Surprise

Ferro Corporation price-consensus-eps-surprise-chart | Ferro Corporation Quote

 

Segment Highlights

Revenues from the Performance Coatings segment fell roughly 8% year over year to $162.4 million in the reported quarter, hurt by lower sales of frits and glazes, colors, opacifiers and porcelain enamel that more than offset contributions of acquisitions.

The Performance Colors and Glass division raked in sales of $112.7 million, down roughly 9% year over year, mainly due to reduced sales in decoration, electronic, industrial and automotive products. This was partly offset by sales from acquisitions.

Sales from the Color Solutions unit dropped around 6% year over year to $90.6 million, impacted by lower sales in surface technology and pigment products.

Financials

Ferro ended the quarter with cash and cash equivalents of $51.7 million, down around 59% year over year. Long-term debt was $827.8 million, down roughly 10% year over year.

Outlook

Moving ahead, Ferro expects global macro-economic uncertainties to continue through the balance of 2019 and into 2020. This could lead to slower growth in several industries and geographic regions, especially outside North America, per the company. Ferro envisions this to affect visibility of its customers and make them more conservative in their order patterns. It also expects foreign currency rates to remain volatile through 2019.  

The company remains committed to advance its optimization initiatives throughout its global footprint to boost productivity and efficiency. It also expects sustained favorable margin benefit from lower raw material costs in 2019 on a year over year basis. Ferro also sees cash flow from operating activities to remain positive for 2019, which will provide additional liquidity.

Price Performance

Ferro’s shares are down 12.7% year to date, compared with the 18.6% rise recorded by its industry.

 

Zacks Rank & Stocks to Consider

Ferro currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth a look in the basic materials space include Agnico Eagle Mines Limited AEM, Kirkland Lake Gold Ltd. KL and Franco-Nevada Corporation FNV, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 168.6% for the current year. The company’s shares have rallied 67% in a year’s time.

Kirkland Lake Gold has projected earnings growth rate of 96.3% for the current year. The company’s shares have surged around 146% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 39.3% for the current year. The company’s shares have shot up roughly 51% in a year’s time.

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