Back to top

Image: Bigstock

Why Is Methanex (MEOH) Up 5.5% Since Last Earnings Report?

Read MoreHide Full Article

A month has gone by since the last earnings report for Methanex (MEOH - Free Report) . Shares have added about 5.5% in that time frame, outperforming the S&P 500.

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

Methanex Q2 Earnings Beat Estimates, Revenues Up Y/Y

Methanex recorded profit (attributable to Methanex shareholders) of $111 million or $1.36 per share in the second quarter of 2018. The figure increased around 32% from $84 million or 89 cents a year ago and also improved from a profit of $169 million or $2.00 in the previous quarter.
 
Adjusted (barring one-time items) earnings per share in the quarter were $1.75. It beat the Zacks Consensus Estimate of $1.70.

Adjusted EBITDA of the chemical maker in the quarter was $275 million compared with $174 million in the prior-year quarter.
 
Revenues increased roughly 42% year over year to $950 million in the second quarter. The company gained from higher methanol prices and demand in the quarter.  

Production in the second quarter totaled 1,648,000 tons compared with 1,614,000 tons a year ago.
 
Average realized price for methanol was $405 per ton in the reported quarter, up from $327 per ton a year ago and $402 per ton in the preceding quarter.

Financials

Cash flow from operating activities in the reported quarter was $290 million compared with $243 million in the prior-year quarter. Cash and cash equivalents were $320 million at the end of the quarter, down 11% year over year. Long-term debt was around $1.46 billion, down roughly 1.3% year over year.

Outlook
 
Methanex’s Chile IV plant is progressing with its restart process which is expected to be complete by the end of 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 an upward trend in fresh estimates. The consensus estimate has shifted 101% due to these changes.

VGM Scores

Currently, Methanex has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. 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 equally suitable for value and growth investors while momentum investors may want to look elsewhere.

Outlook

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Methanex Corporation (MEOH) - free report >>

Published in