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Why is Methanex (MEOH) Up 6.9% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Methanex Corporation (MEOH - Free Report) . Shares have added about 6.9% in that time frame.

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

Methanex Q1 Earnings Miss Estimates, Revenues Up Y/Y

Methanex recorded profit (attributable to Methanex shareholders) of $169 million or $2.00 per share in the first quarter of 2018. The reported figure increased around 28% from $132 million or $1.46 a year ago and also rose from a profit of $68 million or 81 cents in the previous quarter. 

Adjusted (barring one-time items) earnings of $2.03 per share, however, missed the Zacks Consensus Estimate of $2.08.

Adjusted EBITDA in the quarter was $306 million compared with $267 million in the prior-year quarter.

Revenues increased roughly 18.8% year over year to $962 million in the first quarter. The company gained from higher methanol prices in the quarter.

Production for the first quarter was 1,943,000 tons compared with 1,866,000 tons in the year-ago period.

Average realized price for methanol was $402 per ton in the reported quarter, up from $365 per ton a year ago and $350 per ton sequentially. 

Financials

Cash flows from operating activities in the reported quarter were $244 million compared with $214 million in the prior-year quarter. Cash and cash equivalents were $371 million at the end of the quarter, down 1.2% year over year. Long-term debt was around $1.45 billion, down roughly 0.8% year over year.

Outlook

Methanex’s Chile IV plant is progressing with its restart process and is expected to be complete by third-quarter 2018. With a committed revolving credit facility, strong balance sheet and healthy cash generation capability, the company believes that it is well positioned to meet its financial commitments, execute growth opportunities and return excess cash to shareholders through dividends and share repurchases.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

Methanex Corporation Price and Consensus

 

Methanex Corporation Price and Consensus | Methanex Corporation Quote

VGM Scores

At this time, MEOH has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. However, the stock was also 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.

Zacks style scores indicate that the company's stock is suitable for value and growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision looks promising. Notably, MEOH has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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