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Chemical Stocks to Watch for Earnings on Oct 21: DOW, CE & OLN

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A few prominent chemical companies are slated to report their quarterly numbers tomorrow. Per the Zacks industry classification, the chemical industry falls under the broader Basic Materials sector. Basic Materials is among those sectors that are expected to deliver positive earnings growth in the third quarter. Overall earnings for the sector are projected to rise 139.9% on 36.7% higher revenues, per the latest Earnings Trends.

A rebound in end-market demand from the coronavirus-induced slowdown is likely to have aided the performance of chemical companies in the third quarter.  

The industry reeled under the effects of demand shocks for much of the first half of last year as global industrial activities were put to a halt amid the pandemic. However, with the easing of restrictions on business activities globally, demand for chemicals started to pick up from the third quarter of 2020. The upturn in demand is being driven by a global upswing in manufacturing and industrial activities.

Chemical makers are benefiting from a strong rebound in demand in key end-use markets, including automotive, building & construction and electronics. These companies are seeing higher demand from the automotive market notwithstanding the chip shortage, which continues to affect automotive production globally. Higher industrial demand is expected to have boosted sales volumes and the top line of chemical companies in the September quarter.

However, chemical companies’ third-quarter results are expected to reflect the impacts of raw material cost inflation as well as higher supply chain and logistics costs. Supply chain disruptions due to coronavirus and weather-related events have led to a spike in raw material costs. The supply crunch was further worsened by Hurricane Ida. Plant shutdowns associated with Ida are expected to have further squeezed the supply of raw materials and pushed up their prices, the impacts of which are likely to reflect on chemical companies’ third-quarter results.

Nevertheless, the benefits of strategic measures, including cost management and productivity improvement, acquisitions, and actions to raise selling prices to counter cost inflation, might reflect on the results of the companies in this space.

We take a look at three chemical companies that are gearing up to report their third-quarter results on Oct 21.

Dow Inc. (DOW - Free Report) will report earnings numbers before the bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -1.30% and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for the company’s revenues is currently pegged at $14,373 million, suggesting a rise of 48% year over year. The consensus estimate for earnings is $2.59.

The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters at an average of 25.6%.

Dow’s third-quarter results are expected to reflect the benefits of cost-reduction initiatives, higher prices and strong demand across a number of end markets. However, plant turnaround costs are likely to have affected its performance. (Read more: Dow Warms Up to Q3 Earnings: What's in the Offing?)

 

Dow Inc. Price and EPS Surprise

 

Dow Inc. Price and EPS Surprise

Dow Inc. price-eps-surprise | Dow Inc. Quote



Celanese Corporation (CE - Free Report) will report results after the closing bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -2.40% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Celanese’s revenues for the third quarter is pegged at $2,172 million, which suggests a year-over-year increase of 53.9%. The consensus estimate for earnings is $4.69.

The company beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 15.9%, on average.

Benefits from productivity actions, investments in high-return organic projects and strategic acquisitions are likely to get reflected in third-quarter performance. However, the company is likely to have faced headwinds from higher input costs. (Read more: Celanese to Report Q3 Earnings: What's in the Cards?)

 

Celanese Corporation Price and EPS Surprise

 

Celanese Corporation Price and EPS Surprise

Celanese Corporation price-eps-surprise | Celanese Corporation Quote



Olin Corporation (OLN - Free Report) will report earnings numbers after the closing bell. Our proven model predicts an earnings beat for the company this time around. This is because it has an Earnings ESP of +6.95% and a Zacks Rank #1.

The Zacks Consensus Estimate for Olin’s revenues is pegged at $2,380 million, which suggests a year-over-year increase of 65.6%. The consensus estimate for earnings is $2.08.

The company beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missing the same once. It has a trailing four-quarter negative earnings surprise of roughly 0.9%, on average.

The company is likely to have gained from its productivity actions and strong performance in its Winchester business. Benefits associated with cost savings and price hikes are likely to have supported its bottom line. However, it is likely to have faced headwinds stemming from higher raw material costs. (Read more: Olin to Report Q3 Earnings: What's in the Offing?)

 

Olin Corporation Price and EPS Surprise

 

Olin Corporation Price and EPS Surprise

Olin Corporation price-eps-surprise | Olin Corporation Quote


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