Back to top

Image: Bigstock

Olin (OLN) to Report Q2 Earnings: What's in the Cards?

Read MoreHide Full Article

Olin Corporation (OLN - Free Report) is set to release second-quarter 2021 results after market close on Jul 27. The company’s productivity actions and strong performance in its Winchester business are likely to get reflected in its second-quarter results. Benefits associated with cost savings and price hikes are likely to have supported the bottom line. However, it is likely to have faced headwinds stemming from higher maintenance costs and sluggish demand across certain key markets.

The company beat the Zacks Consensus Estimate for earnings in two of the last four quarters, while missing the same twice. It has a trailing four-quarter negative earnings surprise of roughly 12.8%, on average. The company reported an earnings surprise of 14.2% in the last reported quarter.

Olin’s shares have surged 271.4% in the past year compared with 30.8% rise of the industry.

Zacks Investment Research
Image Source: Zacks Investment Research

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

Zacks Model

Our proven model predicts an earnings beat for Olin this season. 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.

Earnings ESP: Earnings ESP for Olin is +4.06%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at $1.55. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

What do the Estimates Say?

The Zacks Consensus Estimate for Olin’s revenues in the to-be-reported quarter is pegged at $2,052 million, which suggests year-over-year increase of 65.4%.

The consensus mark for net sales in the Chlor Alkali Products and Vinyls unit is currently pegged at $985 million for the second quarter, which calls for 51.3% year-over-year increase.

Moreover, the Zacks Consensus Estimate for the Winchester segment’s net sales is currently pegged at $400 million that suggests a 107.3% rise from the year-ago quarter’s level. The same for the Epoxy division is pegged at $636 million, which suggests a 60.2% year-over-year increase.

Factors at Play in Q2

Olin’s Chemicals businesses are expected to have benefited from price hikes for chlorine, epichlorohydrin, epoxy resins, bleach, ethylene dichloride, caustic soda and chlorinated organics in the second quarter.

Moreover, the company is likely to have gained from strong performance of its Winchester business on the back of the Lake City U.S. Army ammunition contract. The multi-year contract is expected to have boosted sales and profitability in the second quarter.

The company is also likely to have benefited from improvement of cost structure and efficiency in the second quarter. Productivity actions are also expected to positively contribute to second-quarter results. The company expects productivity measures like plant closures as well as raw materials and railcar management to deliver $50-$100 million of net savings in 2021.

However, the company is expected to have faced headwinds from muted demand across certain key markets. Volumes are likely to have been impacted in the second quarter due to non-participation in certain markets. Higher maintenance costs and unabsorbed fixed manufacturing costs are expected to have dented margins.

Olin Corporation Price and EPS Surprise

 

Olin Corporation Price and EPS Surprise

Olin Corporation price-eps-surprise | Olin Corporation Quote

 

Other Stocks That Warrant a Look

Here are some other companies in the basic materials space you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter.

LyondellBasell Industries N.V. (LYB - Free Report) , scheduled to release earnings on Jul 30, has an Earnings ESP of +9.93% and sports a Zacks Rank #1.

Westlake Chemical Corporation (WLK - Free Report) scheduled to release earnings on Aug 3, has an Earnings ESP of +5.97% and flaunts a Zacks Rank #1.

Eastman Chemical Company (EMN - Free Report) , scheduled to release earnings on Aug 2, has an Earnings ESP of +2.11% and carries a Zacks Rank #3.