A host of chemical companies are lined up to report their quarterly numbers on Aug 2. The chemical industry is gaining strength on the back of continued demand strength across major end-use markets such as construction and automotive and an upswing in the world economy. Improving fundamentals in the energy space — another key market for chemicals — have also acted as significant tailwinds to the chemical industry. The recovery is being driven by a rebound in crude oil prices from their historic lows.
Despite a few headwinds, including a spike in raw materials costs and softness in agricultural commodity prices, chemical companies will likely continue the earnings momentum witnessed in Q1 into Q2 as the fundamental driving factors remain in place.
Strategic measures including productivity improvement, pricing actions and portfolio restructuring are expected to continue to drive the performance of chemical makers in Q2. Cost-cutting measures by chemical companies should continue to yield industry-wide margin improvement. Synergies from acquisitions should also lend support to earnings. 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 record the strongest gains in Q2. Earnings for the sector are projected to surge 55%, while revenues are expected to move up 24.8%, per the latest Earnings Preview.
We take a look at five chemical companies that are slated to report their Q2 results tomorrow.
DowDuPont Inc. (DWDP - Free Report) will report earnings numbers ahead of the bell. The company is likely to come up with a positive earnings surprise as it has an Earnings ESP of +0.90% and a favorable Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company delivered a positive earnings surprise of 3.7% in the last reported quarter.
The Zacks Consensus Estimate for revenues for DowDuPont for Q2 stands at $23,671 million, reflecting an estimated 10% rise on a sequential comparison basis.
DowDuPont will likely gain from higher pricing, new product launches and solid demand across most of its end-markets in Q2. It should also benefit from cost synergy realizations in the to-be-reported quarter. (Read more: DowDuPont Q2 Earnings: Is Another Beat in Store?)
Westlake Chemical Corporation (WLK - Free Report) will report results before the bell. The company has an Earnings ESP of +3.09% as the Most Accurate Estimate stands at $2.60 while the Zacks Consensus Estimate is pegged at $2.52. The company currently carries a Zacks Rank #3, which coupled with a positive ESP makes us confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Westlake Chemical surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 5.9%.
The Zacks Consensus Estimate for Westlake Chemical’s Q2 revenues is pegged at $2,157 million, projecting an increase of 9% year over year.
The consensus mark for sales at the company’s Olefins segment is currently pegged at $498 million, reflecting a decline of around 1% on a sequential comparison basis. The Zacks Consensus Estimate for sales for the Vinyls segment is pegged at $1,673 million, projecting sequential growth of 1.6%.
Westlake Chemical will likely gain from contributions of the Axiall acquisition and higher global demand for all major products in both Vinyls and Olefins segments. (Read more: Westlake Chemical's Q2 Earnings: Is a Beat Likely?)
The Chemours Company (CC - Free Report) will report results after the bell. The company is likely to come up with a positive earnings surprise as it has an Earnings ESP of +2.38% and carries a Zacks Rank #3.
Chemours surpassed the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average beat of 11.9%.
Revenues for Q2 are projected to increase 13.3% year over year, as the Zacks Consensus Estimate is currently $1,800 million.
Chemours should benefit from strong demand across Fluoroproducts and Titanium Technologies segments. It is witnessing solid demand for Ti-Pure titanium dioxide, sustained adoption of Opteon refrigerant and higher demand for fluoropolymers products. The company should also gain from favorable pricing for its products. Moreover, the company’s cost management actions should provide support to its bottom line.
Platform Specialty Products Corporation (PAH - Free Report) will report results ahead of the bell. The company has an Earnings ESP of -1.37%. The Zacks Consensus Estimate is pegged at 24 cents. The stock carries a Zacks Rank #3, but its ESP makes surprise prediction difficult.
The company posted better-than-expected results in two of the last four quarters, missed once and delivered in-line results on the other occasion. The average earnings surprise was a positive 4%.
The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $984 million, reflecting an increase of 4.6% from the year-ago quarter.
The Zacks Consensus Estimate for the company’s Agricultural Solutions unit’s sales is pegged at $500 million, reflecting an increase of 4.4% on a year-over-year basis. The same for the Performance Solutions division stands at $485 million, representing year-over-year growth of 5%.
While the company faces challenges from raw material price inflation, it is likely to gain from pricing initiatives and healthy demand conditions across the end markets in the to-be-reported quarter.
Trinseo S.A. (TSE - Free Report) will report results after the close. The company has an Earnings ESP of -1.84% as the Most Accurate Estimate stands at $2.14 while the Zacks Consensus Estimate is pegged at $2.18. It has a Zacks Rank #4 (Sell), which we caution against going into the earnings announcement.
The company missed the Zacks Consensus Estimate in three of the trailing four quarters while beat once, delivering an average negative surprise of 4%.
The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $1,125 million, reflecting a decline of 1.7% from the year-ago quarter.
The company is likely to gain from healthy styrene margins and strong business fundamentals across its portfolio in the quarter to be reported.
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