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Chemical Stock Q4 Earnings Slated on Jan 31: DWDP, EMN & MTX

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A few chemical companies are scheduled to report their quarterly numbers on Jan 31. Per the Zacks Industry classification, the chemical industry is under the broader Basic Materials sector. After a solid Q3, the Basic Materials sector is expected to lose momentum in Q4. Earnings for the sector are projected to rise a paltry 0.5% in Q4 on 4.3% higher revenues, per the latest Earnings Preview.

The chemical industry’s prospects have taken a beating due to trade frictions between the United States and China. Trade tensions have clouded the overall demand outlook for chemicals. Softer demand from the automotive space is a concern for chemical makers. Notably, the trade conflict has slowed down demand in this major chemical end-use market in China.

Chemical companies are expected to face some seasonal sluggishness in demand in the December quarter. Companies in this space also face headwinds from a spike in costs of raw materials as a result of short supply partly due to production outages and plant shutdowns. Some of these companies are also exposed to challenges from elevated energy and logistics costs.

Nevertheless, chemical makers should be able to offset the concerns with strategic measures, including cost-cutting and productivity improvement and actions to raise selling prices. A number of companies are taking aggressive price increase actions in the wake of raw material cost inflation. These actions should spur margin improvement in Q4.

Moreover, chemical companies remain actively focused on mergers and acquisitions to diversify and drive growth. Synergies from acquisitions should also lend support to earnings in Q4. Moreover, President Donald Trump’s business-friendly tax reform should continue to contribute to the performance of U.S. chemical makers.

We take a look at three chemical companies that are gearing up to report their Q4 results tomorrow.

DowDuPont Inc. will report earnings numbers ahead of the bell. It has an Earnings ESP of -3.75% as the Most Accurate Estimate is currently pegged at 86 cents while the Zacks Consensus Estimate stands at 89 cents. The stock carries a favorable Zacks Rank #3 (Hold), but its negative ESP makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 8.7%.

The Zacks Consensus Estimate for Q4 revenues for DowDuPont is currently pegged at $21,105 million, reflecting 5.2% growth year over year.

DowDuPont should gain from higher pricing and solid demand across most of its end-markets in Q4. It should also benefit from cost synergy realizations and contributions of new products in the to-be-reported quarter. However, the company faces headwinds from higher raw material costs. (Read more: DowDuPont Gears Up for Q4 Earnings: What's in Store?)

Eastman Chemical Company (EMN - Free Report) will report results after the closing bell. It has an Earnings ESP of -1.33% as the Most Accurate Estimate is currently pegged at $1.58 while the Zacks Consensus Estimate stands at $1.60. It has a Zacks Rank #4 (Sell), which we caution against going into the earnings announcement. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eastman Chemical topped the Zacks Consensus Estimate in each of the trailing four quarters with an average earnings beat of roughly 15.4%.

The Zacks Consensus Estimate for revenues for Q4 is currently pegged at $2,423 million, reflecting a rise of roughly 2.6% year over year.

The Zacks Consensus Estimate for revenues for Eastman Chemical’s Additives and Functional Products division is $880 million, indicating a 3% rise year over year. However, the Zacks Consensus Estimate for the unit’s operating earnings (as adjusted) stands at $152 million, suggesting a year-over-year decline of 5%.

Advanced Materials unit’s revenues are expected to increase 6% year over year as the Zacks Consensus Estimate is $673 million. Operating earnings are expected to dip 1.1% as the Zacks Consensus Estimate stands at $93 million.

Revenues for the Chemical Intermediates segment are projected to rise 2% from the year-ago quarter as the Zacks Consensus Estimate stands at $672 million. Operating earnings for the unit are expected to remain flat year over year as the Zacks Consensus Estimate stands at $53 million.

Moreover, the Fibers segment is expected to witness a 3.5% rise in revenues year over year as the Zacks Consensus Estimate is pegged at $207 million. Operating earnings are expected to decline 2.4% as the Zacks Consensus Estimate stands at $49.8 million.

Eastman Chemical’s high margin products and its aggressive cost management actions are likely to drive its earnings in Q4. The company should gain from sustained growth of its high margin specialty products. However, the company is exposed to raw material cost inflation, which may weigh on its margins. (Read more: What's in Store for Eastman Chemical in Q4 Earnings?)

Eastman Chemical Company Price and EPS Surprise

 

Eastman Chemical Company Price and EPS Surprise | Eastman Chemical Company Quote

 

Minerals Technologies Inc. (MTX - Free Report) will report results after the bell. It has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.17. The stock carries a Zacks Rank #3, but its ESP makes surprise prediction difficult.

Minerals Technologies beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 1.5%.

The Zacks Consensus Estimate for revenues for Q4 is pegged at $452 million, reflecting a rise of 4.6% from the year-ago quarter.
 
The company should gain from its productivity initiatives and actions to raise selling prices to manage the impact of higher raw material, logistics and energy costs. These actions should support its margins in the to-be-reported quarter. The Sivomatic acquisition should also drive revenues.

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