Yahoo Finance Kronos Worldwide (KRO) Up 3.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Kronos Worldwide (KRO). Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kronos Worldwide 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.
Kronos Worldwide’s Earnings and Sales Lag Estimates in Q3
Kronos Worldwide logged profits of $21 million or 18 cents per share in third-quarter 2022, down from $36 million or 31 cents in the year-ago quarter. The figure missed the Zacks Consensus Estimate of 37 cents.
The bottom line in the reported quarter was hurt by lower income from operations resulting from higher production costs and reduced sales volumes, partly offset by increased average TiO2 selling prices.
Net sales fell 8% year over year to $459.6 million as reduced sales volumes in European, export and North American markets more than offset higher average TiO2 selling prices. The top line missed the Zacks Consensus Estimate of $516.2 million.
Volumes and Pricing
TiO2 production volumes were down 5% year over year in the third quarter. TiO2 sales volumes fell 20% year over year.
TiO2 segment profit declined around 43% year over year to $34.6 million in the reported quarter. The downside was driven by lower sales volumes and higher production costs, including raw material and energy costs. These were partly masked by higher average TiO2 selling prices.
Average TiO2 selling prices rose 21% year over year in the quarter.
Financials
Kronos Worldwide ended the quarter with cash and cash equivalents of $338.5 million, down roughly 9% year over year. Long-term debt was $390.9 million, a roughly 15% year-over-year decline.
Outlook
Kronos expects its sales volumes and operating results to be unfavorably impacted by the effects of reduced demand and increased costs in the near term.
The company has implemented production cuts at two of its European facilities during the fourth quarter in response to lower demand coupled with higher production costs, particularly in Europe. It will continue to monitor current and expected near-term customer demand levels and will align its production and inventories accordingly. The company expects the long-term outlook for its industry to remain positive.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -54.24% due to these changes.
VGM Scores
Currently, Kronos Worldwide has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 this revision indicates a downward shift. It's no surprise Kronos Worldwide has a Zacks Rank #5 (Strong 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 13.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Eastman Chemical reported revenues of $2.71 billion in the last reported quarter, representing a year-over-year change of -0.4%. EPS of $2.05 for the same period compares with $2.46 a year ago.
For the current quarter, Eastman Chemical is expected to post earnings of $1.41 per share, indicating a change of -22.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Eastman Chemical. Also, the stock has a VGM Score of C.
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