It has been about a month since the last earnings report for Kronos Worldwide (KRO Quick QuoteKRO - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.

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

Kronos Worldwide’s Earnings and Sales Lag Estimates in Q1

Kronos Worldwide logged a loss of 13 cents per share in first-quarter 2023, against earnings of 50 cents in the year-ago quarter. It missed the Zacks Consensus Estimate of earnings of 26 cents.

The bottom line in the reported quarter was hurt by lower income from operations resulting from higher production costs and reduced sales volumes, partly offset by increased TiO2 selling prices.

Net sales fell around 24% year over year to $426.3 million as reduced sales volumes in all major markets more than offset higher average TiO2 selling prices. The top line missed the Zacks Consensus Estimate of $566 million.

Volumes and Pricing

TiO2 production volumes were down 24% year over year in the first quarter. TiO2 sales volumes fell 29% year over year.

TiO2 segment loss was $14.8 million in the reported quarter compared with segment profit of $86.8 million a year ago. The downside was driven by reduced income from operations on lower sales volumes and higher production costs, including raw material and energy costs. These were partly offset by higher average TiO2 selling prices.

Average TiO2 selling prices rose 4% year over year in the quarter.

Financials

Kronos Worldwide ended the quarter with cash and cash equivalents of $177.8 million, down roughly 49% year over year. Long-term debt was $433.5 million, a roughly 2% year-over-year decline.

Outlook

Kronos said that while it witnessed some improvement in demand in the first quarter, it continued to experience general economic weakness as customers operated at lower production rates due to weaker than expected sales and inventory right sizing. It anticipates customer demand will gradually return throughout 2023.

The company expects selling prices to increase throughout the balance of 2023, leading to improved margins as demand increases. It expects to report lower operating results for full-year 2023 on a year-over-year basis factoring in the weak demand recovery and higher production costs resulting from unfavorable fixed cost absorption at reduced production rates.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted -6.25% due to these changes.

VGM Scores

Currently, Kronos Worldwide has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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 this revision indicates a downward shift. Notably, Kronos Worldwide has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.