It has been about a month since the last earnings report for Methanex (MEOH Quick QuoteMEOH - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Methanex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Methanex’s Q1 Earnings Meet, Revenues Beat Estimates

Methanex logged a profit (attributable to shareholders) of $105 million or $1.19 per share in the first quarter of 2021 compared with a profit of $23 million or 21 cents per share in the year-ago quarter.

Adjusted earnings per share (barring one-time items) in the reported quarter were $1.07, in line with the Zacks Consensus Estimate.

Revenues rose around 36.4% year over year to $1,016 million in the quarter. It surpassed the Zacks Consensus Estimate of $854 million.

Adjusted EBITDA for the reported quarter increased 75.4% year over year to $242 million.

Operational Highlights

Production in the quarter totaled 1,596,000 tons, down around 21% year over year. Total sales volume for the first quarter was 2,793,000 tons, almost in line with prior-year quarter’s figures.

Average realized price for methanol was $363 per ton in the quarter, up roughly 14.3% from $267 per ton in the prior-year quarter. A steady recovery in methanol demand and lower industry operating rates led to higher methanol prices. Strong methanol demand coupled with low global inventory levels and ongoing industry-supply challenges continue to drive tight market conditions into the second quarter, the company noted.

Financials

Cash and cash equivalents increased around 4% year-over-year to $856 million at the end of the first quarter. Long term debt at the end of first quarter was $2,305.6 million, up around 7.3% year over year.

For the first quarter, cash flow from operating activities was $167 million, up around 17.6% year over year. The company paid out dividends worth $3 billion during the reported quarter.

Outlook

Methanex is encouraged by favorable industry conditions in the first quarter followed by positive momentum heading into the second quarter. The company expects manufacturing activity to rebound and the economy to fully recover in the medium term as vaccine rollouts accelerate and as governments announce additional fiscal support measures. It is focused on preserving liquidity and financial flexibility to boost shareholders’ value in the long term.

Moreover, the company expects to spend around $60 million on its Geismar 3 project, during the care and maintenance period, over the next six months.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 387.26% due to these changes.

VGM Scores

Currently, Methanex has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Methanex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.