Back to top

Image: Bigstock

LyondellBasell (LYB) to Post Q3 Earnings: What's in Store?

Read MoreHide Full Article

LyondellBasell Industries N.V. (LYB - Free Report) is set to release third-quarter 2020 results on Oct 30, before the opening bell.

The company has a trailing four-quarter earnings surprise of 1.5%, on average. LyondellBasell’s third-quarter performance is expected to reflect the benefits of improving demand for transportation fuels, which is likely to have boosted profitability of its Oxyfuels & Related Products business. Higher demand in the automotive market is also likely to have aided its Advanced Polymer Solutions segment.

The stock has lost 19.9% in the past year against 1.6% rise of the industry.

Let’s see how things are shaping up prior to this announcement.

What to Expect in Q3

In second-quarter 2020 earnings call, LyondellBasell stated that demand for its products is improving on increasing economic activity. In response to higher demand, the company raised operating rates and prices for North American polyethylene exports to Asia. It expects Refining and Oxyfuels & Related Products businesses demand to improve with higher mobility and reductions in fuel inventories. Also, the Advanced Polymer Solutions unit is gaining from rebounding demand for its plastics used in automotive manufacturing.

In July, LyondellBasell stated that it expects to operate its U.S. ethylene crackers at nearly full rates of 95% of nameplate capacity in the third quarter. Its European crackers are also expected to operate at about 90% of nameplate capacity during the third quarter. However, the company expects margins to decline in the third quarter due to higher feedstock costs.

LyondellBasell anticipates demand for transportation fuels to improve in the third quarter, which will boost profitability of its Oxyfuels & Related Products business. Also, it expects third-quarter profitability for the Advanced Polymer Solutions segment to benefit from returning demand for its polypropylene compounds utilized in automotive end-markets. Third-quarter licensing profitability in the technology segment is expected to be in-line with prior-year quarter’s tally.

What do the Estimates Indicate?

The Zacks Consensus Estimate for third-quarter consolidated sales is pegged at $6,909 million, which calls for a decline of 20.8% year over year.

The Zacks Consensus Estimate for sales in the LyondellBasell’s Olefins & Polyolefins — Americas unit is currently pegged at $1,892 million, which suggests a decline of 11.5% year over year.

The Zacks Consensus Estimate for sales in the Olefins & Polyolefins — Europe, Asia, International segment is currently pegged at $1,926 million, which suggests a fall of 16.6% year over year.

The consensus mark for sales in the Intermediates and Derivatives segment is currently pegged at $1,288 million, which calls for a plunge of 37% year over year.

The Zacks Consensus Estimate for sales in the Refining segment is currently at $1,241 million, which indicates a fall of 41.8% year over year.

The consensus mark for sales in the Technology segment is currently pegged at $145 million, which suggests a drop of 0.7% year over year.

What Does the Zacks Model Say?

Our proven model does not predict an earnings beat for LyondellBasell this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here:

Earnings ESP: Earnings ESP for LyondellBasell is -2.40%. The Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at $1.11 and $1.14, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: LyondellBasell currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Likely to Beat Estimates

Here are some companies that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Olin Corporation (OLN - Free Report) , scheduled to release third-quarter 2020 earnings on Nov 4, has an Earnings ESP of +6.25% and carries a Zacks Rank #3.

Pan American Silver Corp. (PAAS - Free Report) , scheduled to release third-quarter 2020 earnings on Nov 4, has an Earnings ESP of +0.93% and carries a Zacks Rank #3.

Domtar Corporation (UFS - Free Report) , slated to release third-quarter 2020 earnings on Nov 6, has an Earnings ESP of +57.14% and carries a Zacks Rank #3.

Zacks’ 2020 Election Stock Report:

In addition to the companies you learned about above, we invite you to learn more about profiting from the upcoming presidential election. Trillions of dollars will shift into new market sectors after the votes are tallied, and investors could see significant gains. This report reveals specific stocks that could soar: 6 if Trump wins, 6 if Biden wins.

Check out the 2020 Election Stock Report >>