A few chemical companies are scheduled to report their quarterly numbers on Feb 1. As per the Zacks Industry classification, the chemical industry is grouped under the broader Basic Materials sector, which is among those Zacks sectors that are expected to rack up the strongest gains in the fourth quarter. Fourth-quarter earnings for the sector are projected to climb 30.4% while revenues are expected to spike 18.9%, per the latest Earnings Preview.
The chemical industry enjoyed a positive run in 2017, supported by an upswing in the world economy and strength across major end-use markets such as construction and automotive. A recovery in demand in the energy space has been another tailwind for the chemical industry, thanks to the recent rebound in crude oil prices.
Despite a few challenges including some lingering impacts of devastating hurricanes, chemical companies are expected to continue the earnings momentum witnessed in the third quarter into the December quarter as the fundamental driving factors remain firmly in place.
Strategic measures including productivity improvement, pricing actions and portfolio restructuring are expected to continue to drive the performance of chemical makers in the fourth quarter. Cost-cutting measures by chemical companies should continue to yield industry-wide margin improvements. Synergies from acquisitions should also lend support to earnings.
Let's see what's in store for these three chemical companies that are set to report their fourth-quarter results this Thursday.
DowDuPont Inc. (DWDP - Free Report) will report ahead of the bell. It has an Earnings ESP of +1.37% as the Most Accurate estimate stands at 68 cents while the Zacks Consensus Estimate is pegged at 67 cents. The company currently carries a Zacks Rank #2 (Buy), which coupled with a positive ESP makes us confident of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
DowDuPont was formed through the $130-billion mega-merger of chemical giants, The Dow Chemical Company and E.I. du Pont de Nemours & Company (DuPont), completed on Aug 31, 2017.
The Zacks Consensus Estimate for revenues for DowDuPont for the fourth quarter stands at $19,371 million.
While raw material cost inflation poses as a headwind, DowDuPont is expected to continue to gain from higher volumes (driven by strong demand across its major end-markets) and pricing along with new product penetrations and improved mix in the December quarter. Strong growth in semiconductors and consumer electronics is expected to continue in the fourth quarter. (Read more: DowDuPont Q4 Earnings: Is a Beat in the Cards?)
Eastman Chemical Company (EMN - Free Report) will report after the close. The company has an Earnings ESP of +17.85% as the Most Accurate estimate stands at $1.33 while the Zacks Consensus Estimate is pegged at $1.12. It currently carries a favorable Zacks Rank #3 (Hold) which further strengthens our prediction of an earnings beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Eastman Chemical topped the Zacks Consensus Estimate in each of the trailing four quarters with an average beat of roughly 5%.
Revenues for Eastman Chemical for the fourth quarter is projected to rise roughly 4.6% year over year as the Zacks Consensus Estimate is currently pegged at $2,290 million.
Revenues from Eastman Chemical’s Additives and Functional Products division is anticipated to witness a 10.6% rise from the year-ago figure as the Zacks Consensus Estimate for the fourth quarter is pegged at $796 million.
Advanced Materials unit’s revenues are expected to increase 3.9% from the year ago quarter as the Zacks Consensus Estimate for the fourth quarter is $607 million.
Revenues for the Chemical Intermediates segment are projected to remain flat year over year as the Zacks Consensus Estimate stands at $643 million.
Meanwhile, the Fibers segment is expected to witness a 16.5% year over year decline in revenues as the Zacks Consensus Estimate is pegged at $192 million for the fourth quarter.
While Eastman Chemical faces headwinds from high raw material costs and challenges in the Fibers unit, sustained growth of its high margins specialty products and aggressive cost management actions are likely to continue to drive its earnings in the fourth quarter. (Read more: Can Eastman Chemical Sustain Earnings Streak in Q4?)
Minerals Technologies Inc. (MTX - Free Report) will report its results after the close. The company is expected to come up with a positive surprise as it has an Earnings ESP of +1.84% and a Zacks Rank #3.
Minerals Technologies beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average positive surprise of 1.2%.
The Zacks Consensus Estimate for revenues for the to-be-reported quarter is pegged at $410.6 million, reflecting a rise of 2.3% from the year-ago quarter.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>