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LyondellBasell (LYB) Q3 Earnings: A Beat in the Cards?
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LyondellBasell Industries (LYB - Free Report) is set to release its third-quarter 2016 results ahead of the bell on Nov 1.
Last quarter, the Netherlands-based chemical giant delivered a negative earnings surprise of 3.54%. Revenues fell by double digits year over year on declines across most businesses and trailed expectations.
LyondellBasell has surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average earnings beat of 4.83%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
LyondellBasell, in its last quarter earnings call, said that the trend of the polyolefin and chemicals market seen in the second quarter is continuing in the third quarter. However, oxyfuel and refining margins have declined since the beginning of the third quarter.
LyondellBasell continues to benefit from the favorable North American natural gas environment. It should also gain from its ethylene and polyethylene expansions. The company is executing plans to leverage the U.S. natural gas liquids (NGLs) advantage. It remains on track with its multi-plant ethylene expansion programs across Channelview, La Porte and Corpus Christi facilities in Texas which benefit from shale gas production.
LyondellBasell is also advancing plans to build a world-scale plant on the U.S. Gulf Coast for producing propylene oxide (“PO”) and tertiary butyl alcohol (“TBA”), leveraging the shale gas boom in the region. The new PO/TBA facility, considered to be the largest of its kind, will be built in the Houston area.
The company is also building a high density polyethylene (HDPE) plant on the U.S. Gulf Coast. The facility, which will have an annual capacity of 1.1 billion pounds (500,000 metric tons), will be the first commercial plant to employ the company’s new proprietary Hyperzone PE technology. LyondellBasell has chosen its La Porte, TX, manufacturing complex as the site for its new HDPE plant.
However, LyondellBasell is exposed to headwind from weak product prices. The low oil price environment remains a concern for the company. Depressed oil prices may continue to hurt its U.S. ethylene margins, thereby affecting its profitability.
Moreover, LyondellBasell’s operations are subject to maintenance outages, affecting its production. Maintenance turnarounds and a repair at the refinery impacted its second-quarter results. The company has a number of plant maintenances scheduled in second-half 2016. LyondellBasell expects net value of lost production in the third quarter to be around $135 million. The value of lost production for the first three quarters of 2016 has been estimated at around $300 million.
Earnings Whispers
Our proven model shows that LyondellBasell is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: The Earnings ESP for LyondellBasell is +0.87% as the Most Accurate Estimate stands at $2.32 while the Zacks Consensus Estimate is pegged at $2.30. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: LyondellBasell currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings.
Conversely, sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of LyondellBasell’s Zacks Rank #2 and positive ESP makes us reasonably confident of an earnings beat.
Here are some stocks in the basic materials space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Cabot Corporation (CBT - Free Report) holds a Zacks Rank #2 and has Earnings ESP of +7.45%.
Olin Corp. (OLN - Free Report) has Earnings ESP of +6.06% and carries a Zacks Rank #3.
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LyondellBasell (LYB) Q3 Earnings: A Beat in the Cards?
LyondellBasell Industries (LYB - Free Report) is set to release its third-quarter 2016 results ahead of the bell on Nov 1.
Last quarter, the Netherlands-based chemical giant delivered a negative earnings surprise of 3.54%. Revenues fell by double digits year over year on declines across most businesses and trailed expectations.
LyondellBasell has surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average earnings beat of 4.83%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
LyondellBasell, in its last quarter earnings call, said that the trend of the polyolefin and chemicals market seen in the second quarter is continuing in the third quarter. However, oxyfuel and refining margins have declined since the beginning of the third quarter.
LyondellBasell continues to benefit from the favorable North American natural gas environment. It should also gain from its ethylene and polyethylene expansions. The company is executing plans to leverage the U.S. natural gas liquids (NGLs) advantage. It remains on track with its multi-plant ethylene expansion programs across Channelview, La Porte and Corpus Christi facilities in Texas which benefit from shale gas production.
LyondellBasell is also advancing plans to build a world-scale plant on the U.S. Gulf Coast for producing propylene oxide (“PO”) and tertiary butyl alcohol (“TBA”), leveraging the shale gas boom in the region. The new PO/TBA facility, considered to be the largest of its kind, will be built in the Houston area.
The company is also building a high density polyethylene (HDPE) plant on the U.S. Gulf Coast. The facility, which will have an annual capacity of 1.1 billion pounds (500,000 metric tons), will be the first commercial plant to employ the company’s new proprietary Hyperzone PE technology. LyondellBasell has chosen its La Porte, TX, manufacturing complex as the site for its new HDPE plant.
However, LyondellBasell is exposed to headwind from weak product prices. The low oil price environment remains a concern for the company. Depressed oil prices may continue to hurt its U.S. ethylene margins, thereby affecting its profitability.
Moreover, LyondellBasell’s operations are subject to maintenance outages, affecting its production. Maintenance turnarounds and a repair at the refinery impacted its second-quarter results. The company has a number of plant maintenances scheduled in second-half 2016. LyondellBasell expects net value of lost production in the third quarter to be around $135 million. The value of lost production for the first three quarters of 2016 has been estimated at around $300 million.
Earnings Whispers
Our proven model shows that LyondellBasell is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: The Earnings ESP for LyondellBasell is +0.87% as the Most Accurate Estimate stands at $2.32 while the Zacks Consensus Estimate is pegged at $2.30. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: LyondellBasell currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings.
Conversely, sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of LyondellBasell’s Zacks Rank #2 and positive ESP makes us reasonably confident of an earnings beat.
LYONDELLBASEL-A Price and EPS Surprise
LYONDELLBASEL-A Price and EPS Surprise | LYONDELLBASEL-A Quote
Stocks That Warrant a Look
Here are some stocks in the basic materials space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Chemours Company (CC - Free Report) has an Earnings ESP of +25.71% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot Corporation (CBT - Free Report) holds a Zacks Rank #2 and has Earnings ESP of +7.45%.
Olin Corp. (OLN - Free Report) has Earnings ESP of +6.06% and carries a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>