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LyondellBasell (LYB) Down 7.7% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for LyondellBasell Industries NV (LYB - Free Report) . The stock has lost about 7.7% in the past month, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted 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.

LyondellBasell Misses Q1 Earnings Estimates, Sales Top

LyondellBasell’s profits from continuing operations, as reported, fell around 22% year over year to $805 million or $2.00 per share in the first quarter of 2017. Earnings in the reported quarter were hit by charges related to the repayment of debt.

Barring one-time items, earnings came in at $2.26 per share for the quarter, trailing the Zacks Consensus Estimate of $2.33.

Revenues rose roughly 25% year over year to $8,430 million in the quarter, surpassing the Zacks Consensus Estimate of $7,877 million.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) fell around 11% year over year to $1,617 million in the quarter. The company noted that scheduled maintenance at its U.S. butadiene recovery plant affected margins during the quarter.
 

Segment Review

Revenues from the Olefins & Polyolefins – Americas division went up 23% year over year to $2,604 million in the reported quarter. EBITDA, on a reported basis, fell around 18% year over year to $723 million. Combined polyolefin results decreased roughly $165 million year over year.

Sales from the Olefins & Polyolefins – Europe, Asia, International segment rose 17% year over year to $3,024 million. EBITDA rose around 4% year over year to $529 million. Olefin results improved around $20 million year over year resulting from higher sales volumes and improved ethylene prices.

Intermediates and Derivatives segment sales climbed 26% to $2,150 million in the reported quarter. EBITDA went up roughly 4% year over year to $339 million.

Revenues from the Refining segment surged 42% to $1,353 million. EBITDA was at a loss of $30 million compared with a profit of $14 million recorded in the prior-year quarter. Throughput rose by 16,000 barrels per day in the quarter. The company’s refinery performed planned maintenance on the fluid unit during the quarter.

The Technology segment’s sales fell 9% to $120 million. EBITDA declined 28% year over year to $60 million.

Financials

LyondellBasell ended the quarter with cash and cash equivalents of $485 million, down roughly 63% year over year. Long-term debt fell around 1% year over year to $8,419 million.

LyondellBasell bought back 1.5 million shares during the quarter. Share buybacks and dividends totalled $0.5 billion in the reported quarter.

Outlook

The company said that global olefin and polyolefin industry conditions remain favorable in April. With a lighter maintenance schedule, the company expects to benefit from the full availability of its global assets moving forward.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.

VGM Scores

At this time, LyondellBasell's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. However, 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.

Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.


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