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Koppers (KOP) Stock Up on Q3 Earnings and Revenue Beat

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Koppers Holdings Inc.’s (KOP - Free Report) shares rose after the company came up with its third-quarter 2020 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate and also grew on a year-over-year basis.

The Pennsylvania-based company also raised its earnings outlook for 2020. Its shares popped 5.8% last Thursday on forecast-topping results and upbeat earnings outlook.

Earnings and Revenues Discussion

Koppers logged profits (attributable to the company) of $75.6 million or $3.53 per share for the third quarter, up from a profit of $19.9 million or 94 cents a year ago.

Barring one-time items, earnings were $1.64 per share for the quarter, up from $1.16 per share a year ago. Earnings topped the Zacks Consensus Estimate of $1.29.

Koppers recorded revenues of $437.5 million for the quarter, up 0.8% year over year. It also surpassed the Zacks Consensus Estimate of $425.8 million. Sales were driven by favorable impacts of currency swings.

 

Koppers Holdings Inc. Price, Consensus and EPS Surprise

 

Koppers Holdings Inc. Price, Consensus and EPS Surprise

Koppers Holdings Inc. price-consensus-eps-surprise-chart | Koppers Holdings Inc. Quote

 

Segment Highlights

Sales from the Railroad and Utility Products and Services segment went down around 4% year over year to $191 million in the reported quarter. The decline was due to decreased volumes in the commercial crosstie market, offset by improved demand for utility poles in Australia and crosstie disposal services in the United States.

The Performance Chemicals unit recorded sales of $147.9 million in the quarter, up around 19% year over year. Sales were driven by sustained demand for copper-based preservatives in the United States and pent-up demand in international markets.

Sales from the Carbon Materials and Chemicals division fell around 12% year over year to $98.6 million. Sales were impacted by reduced prices for carbon pitch and phthalic anhydride and lower demand for carbon black feedstock globally.

Financials

Koppers ended the quarter with cash and cash equivalents of $39.5 million, down around 3% year over year. Long-term debt was $796.1 million, down around 16% year over year.

Outlook

Koppers envisions sales for 2020 to be roughly $1.6 billion. The company also expects adjusted EBITDA to be in the band of $204-$210 million for the year, higher than its earlier view of $196-$204 million. Moreover, Koppers sees adjusted earnings per share for 2020 in the band of $3.65-$3.90, also up from its prior expectation of $3.25-$3.50.

The company also expects investments of $55-$60 million in capital expenditures this year, mainly associated with improving safety and reliability of its existing infrastructure. It also plans to cut debt by around $125 million in 2020.

Zacks Rank & Key Picks

Koppers currently carries a Zacks Rank #2 (Buy).

Better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and B2Gold Corp. (BTG - Free Report) .

Agnico Eagle has a projected earnings growth rate of 103.1% for the current year. The company’s shares have gained around 32% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Barrick Gold has an expected earnings growth rate of 96.1% for the current year. The company’s shares have surged around 64% in the past year. It currently carries a Zacks Rank #2.

B2Gold has a projected earnings growth rate of 257.1% for the current year. The company’s shares have shot up roughly 89% in a year. It currently carries a Zacks Rank #2.

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