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Why Is LyondellBasell Industries (LYB) Up 9.9% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for LyondellBasell Industries N.V. (LYB - Free Report) . Shares have added about 9.9% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is LYB 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 drivers.

LyondellBasell Tops Earnings and Sales Estimates in Q1

LyondellBasell’s net profits rose 54.5% year over year to $1.2 billion or $3.11 per share in the first quarter of 2018. Earnings per share surpassed the Zacks Consensus Estimate of $2.80.
 
Revenues increased roughly 15.9% year over year to $9,767 million in the quarter, beating the Zacks Consensus Estimate of $9,392 million.
 
Consolidated EBITDA rose around 18.3% year over year to $1,913 million in the quarter. Higher margins and the company’s organic and inorganic growth initiatives contributed to the results.

Segment Review

In the Olefins & Polyolefins — Americas division, EBITDA rose around 7.9% year over year to $780 million. Olefin results declined roughly $70 million year over year on lower volumes.  Polyolefins results increased by around $155 million, mainly due to polyethylene and polypropylene spread improvements.
 
The Olefins & Polyolefins — Europe, Asia, International segment witnessed a decline in EBITDA of around 2.1% year over year to $518 million. Olefin results decreased $20 million on a year-over-year basis. Polyolefins results decreased by around $60 million, mainly due to lower margin.
 
EBITDA in the Intermediates and Derivatives segment went up roughly 43.4% year over year to $486 million.
 
In the Refining segment, EBITDA was $63 million in the quarter as against a loss of $30 million in the year-ago quarter. Crude throughput rose by 59,000 barrels per day in the quarter.
 
The Technology segment’s EBITDA fell 6.7% year over year to $56 million.
 
Financials
 
LyondellBasell ended the quarter with cash and liquid investments of $3.5 billion.
 
LyondellBasell repurchased 1.3 million shares in the first quarter of 2018 with 393 million shares remaining outstanding at the end of the quarter. The company paid dividend worth $395 million in the quarter.
 
Outlook

 
The company sees seasonal margin improvements in oxyfuels and refining. It also expects to benefit from continued high operating rates in the second quarter. The imbalance between ethylene production and consumption is expected to improve as the downstream derivative units attain full operating rates, the company noted. Strong global demand and higher oil prices continue to support strong polyolefin pricing, LyondellBasell added.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower.

LyondellBasell Industries N.V. Price and Consensus

VGM Scores

At this time, LYB has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 more suitable for value investors than those looking for growth and momentum.

Outlook

LYB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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