A host of chemical companies are among a barrage of the S&P 500 stocks gearing up to report their quarterly numbers this earnings-heavy week. The chemical industry falls under the broader Basic Materials sector. Based on the earnings scorecard as of Oct 21, 20% of the sector participants on the S&P 500 Index have already unveiled their quarterly numbers. Earnings for these companies are up 29.4% from the same period last year on 1.1% lower revenues, per the latest Earnings Preview report.
Among the seven out of the 16 Zacks sectors expected to see a fall in earnings this reporting cycle, the Basic Materials sector is one as it is projected to witness an earnings decline of 1.3% on 3.1% lower sales.
The chemical industry is clawing its way back after being roiled by the global economic crisis. The industry’s recovery is expected to continue through the balance of 2016, supported by continued strength in the automotive market, positive trends in the construction space and significant shale gas-linked capital investment.
Chemical companies also remain actively focused on expanding their reach in high-growth markets and are increasingly looking for cost synergy opportunities and enhanced operational scale through consolidation.
However, the industry still faces certain roadblocks including a slowdown in China, sluggish demand in the energy space, soft agriculture market fundamentals and a choppy Europe.
Let’s take a look at four chemical companies that are scheduled to report their third-quarter results on Oct 26.
W.R. Grace & Co. (GRA - Free Report) , which will report before the bell, has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 75 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
W.R. Grace carries a favorable Zacks Rank #3 (Hold), but its 0.00% ESP makes surprise prediction difficult. The company beat the Zacks Consensus Estimate in each of the four trailing quarters with an average positive surprise of 8.67%.
NewMarket Corporation (NEU - Free Report) , which will report after the close, has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $5.09. This is what makes surprise prediction difficult even though the company carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
NewMarket beat the Zacks Consensus Estimate in all of the four trailing quarters with an average positive surprise of 9.05%.
PolyOne Corporation (POL - Free Report) , which will report before the bell, has an Earnings ESP of -1.82% as the Most Accurate Estimate stands at 54 cents while the Zacks Consensus Estimate is pegged at 55 cents. The company also carries a Zacks Rank #4 (Sell), which we caution against ahead of earnings release. PolyOne surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 3.68%.
Methanex Corporation (MEOH - Free Report) is expected to post a positive earnings surprise as it carries a favorable Zacks Rank #3 and has an Earnings ESP of +9.52%. Methanex surpassed the Zacks Consensus Estimate in two out of the four trailing quarters, while missed in two. The average surprise is a positive 8.35% for the last four quarters.
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