A few prominent chemical companies are scheduled to report their quarterly numbers on Apr 26. The chemical industry is riding high on an upturn in the world economy and continued strength across major end-use markets such as construction, automotive and electronics. Another positive for the industry is a recovery in demand in the energy space – a key chemical end-market that had been out of favor for a spell. The recovery is being driven by the rebound in crude oil prices from their historic lows.
The U.S. Chemical Industry has recovered from the damaging effects of Hurricane Harvey and is well set to ride the growth wave this year. The European chemical industry is also back on track after a long detour, taking succour from an improving global economic sentiment and an upturn in the Eurozone economy.
Despite a few challenges including raw material cost inflation, chemical companies are expected to continue the earnings momentum in the March quarter as the fundamental driving factors remain firmly in place.
Strategic measures like productivity improvement, pricing actions, portfolio restructuring and earnings-accretive acquisitions are expected to continue to drive the performance of chemical makers in Q1. Moreover, President Donald Trump’s business-friendly tax reform is a positive for U.S. chemical stocks.
Per the Zacks Industry classification, the chemical industry is grouped under the broader Basic Materials sector, which is among the Zacks sectors that are expected to score the strongest gains in Q1. Earnings for the sector are projected to surge 41% in Q1 while revenues are expected to improve 19.8%, per the latest Earnings Preview.
We take a look at four chemical companies that are gearing up to report their results tomorrow.
Air Products & Chemicals, Inc. (APD - Free Report) will report fiscal Q2 earnings numbers ahead of the bell. The company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.68. It has a Zacks Rank #4 (Sell), which we caution against going into the earnings announcement. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Air Products surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of around 4.7%.
The Zacks Consensus Estimate for Air Products’ fiscal Q2 revenues stands at $2,190 million, reflecting an increase of 10.6% from the year-ago quarter.
Revenues for Air Products’ Industrial Gases — America segment are projected to witness a 4.7% rise from the year-ago figure as the Zacks Consensus Estimate is pegged at $932 million. Moreover, Air Products’ Industrial Gases — Asia segment’s revenues are projected to increase 18.8% from the year-ago quarter as the Zacks Consensus Estimate stands at $518 million.
The Zacks Consensus Estimate for revenues for the Industrial Gases — EMEA segment is $494 million, reflecting an estimated rise of 19.3% year over year. The same for the Industrial Gases — Global segment stands at $181 million, representing a year-over-year decline of 16.6%.
Air Products’ strategic investments in high-return projects, new business wins and acquisitions are also expected to aid results. The company also remains on track with its cost-reduction programs, which are likely to support margins. (Read more: What's in the Offing for Air Products in Q2 Earnings?)
Eastman Chemical Company (EMN - Free Report) will report Q1 results after the close. The company has an Earnings ESP of -0.39% as the Most Accurate estimate stands at $2.10 while the Zacks Consensus Estimate is pegged at $2.11. While the stock carries a Zacks Rank #2 (Buy), its negative ESP makes surprise prediction difficult. 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 17.7%.
Revenues for Eastman Chemical for Q1 are projected to rise roughly 6.9% year over year as the Zacks Consensus Estimate for the quarter is currently pegged at $2,461 million.
Revenues from Eastman Chemical’s Additives and Functional Products division is anticipated to witness an 8.9% rise from the year-ago figure as the Zacks Consensus Estimate is pegged at $842 million. Advanced Materials unit’s revenues are expected to increase 6.5% from the year-ago quarter as the Zacks Consensus Estimate is $675 million.
Revenues for the Chemical Intermediates segment are projected to rise 6% year over year as the Zacks Consensus Estimate stands at $710 million. Meanwhile, the Fibers segment is expected to witness a 5.2% year-over-year decline in revenues as the Zacks Consensus Estimate is pegged at $202 million.
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 Q1. (Read more: Can Eastman Chemical Sustain Earnings Streak in Q1?)
Praxair Inc. will report Q1 results before the bell. It has an Earnings ESP of -0.48% as the Most Accurate estimate stands at $1.55 while the Zacks Consensus Estimate is pegged at $1.56. While the stock carries a favorable Zacks Rank #3 (Hold), its negative ESP makes surprise prediction difficult.
Praxair surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 3%.
Revenues for Q1 are projected to rise 7.4% year over year, as the Zacks Consensus Estimate is currently $2,930 million.
The Zacks Consensus Estimate for the company’s North America segment’s revenues stands at $1,552 million, reflecting an increase of 0.6% on a sequential comparison basis. The same for the South America segment’s revenues stands at $383 million, representing a sequential rise of 3.5%.
Praxair’s North America segment is expected to gain from rising demand for gases for industrial use, especially in the metals, chemicals, downstream energy and manufacturing end markets. Also, the company’s efforts to expand business in non-industrial areas should be fruitful. Favorable pricing and volumes are also expected to support margins in Q1. (Read more: Praxair to Report Q1 Earnings: What's in the Offing?)
PolyOne Corporation (POL - Free Report) will report Q1 results before the bell. The company is expected to come up with a positive earnings surprise as it has an Earnings ESP of +0.77% and a Zacks Rank #3.
PolyOne topped the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 5.5%.
The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $861.9 million, reflecting a decline of 4.1% from the year-ago quarter.
The Zacks Consensus Estimate for sales of the company’s Color, Additives and Inks unit is pegged at $241 million, reflecting an increase of 13.7% on a year-over-year basis. The same for the Specialty Engineered Materials division stands at $168 million, representing year-over-year growth of 5.7%.
Moreover, the Zacks Consensus Estimate for Performance Products and Solutions division sales stands at $193 million, reflecting a rise of 4.9% from the year-ago quarter.
While PolyOne is exposed to headwinds from raw material cost inflation, it is gaining from acquisitions and strategic investments in commercial resources. The company should benefit from the acquisition of specialty inks maker, Rutland Holding Company that has expanded its portfolio of specialty color, additives and inks solutions. Moreover, the buyout of Mesa has broadened the company’s portfolio of color and additives solutions.
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