Shares of Methanex Corporation (MEOH - Free Report) scaled a fresh 52-week high of $77.10 on Aug 28 before closing the day at $75.75.
Methanex has a market cap of roughly $6 billion and average volume of shares traded in the last three months was around 418K. The company has an expected long-term earnings per share growth rate of 15%, higher than the industry average of 11.3%.
Methanex’s shares have gained 8.3% in the last three months, significantly outperforming the industry’s growth of 3.6%.
Forecast-topping second-quarter earnings performance, and strong demand and pricing fundamentals for methanol have contributed to the rally in Methanex’s shares.
The company’s net profit jumped in the second quarter to $111 million or $1.36 per share from $84 million or 89 cents a year ago, while adjusted earnings of $1.75 per share surpassed the Zacks Consensus Estimate of $1.70.
Demand for methanol has been driven by both traditional derivatives and energy-related applications in Asia, particularly in China. Per the company, global demand for methanol increased 4% year over year in the second quarter of 2018 and is expected to remain healthy in 2018.
Moreover, higher methanol prices are boosting the company’s revenues and margins. In the second quarter, the company’s average realized prices for methanol climbed roughly 24% year over year.
Moreover, Methanex remains on track with its plans of capitalizing on near-term growth opportunities in Chile. Methanex’s Chile IV plant is progressing with its restart process, which is expected to be completed 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. Methanex returned $241 million in cash to shareholders in the form of dividends and share repurchases in the last quarter.
Earnings estimates for Methanex have also moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 13.5% to $7.30. The Zacks Consensus Estimate for third-quarter 2018 has also shot up 101% over the same timeframe to $2.01.
The Zacks Consensus Estimate for 2018 reflects a year-over-year growth of 55%. For third-quarter 2018, earnings are expected to rise a whopping 235% year over year.
Methanex Corporation Price and Consensus
Zacks Rank & Stocks to Consider
Methanex is a Zacks Rank #3 (Hold) stock.
Some better-ranked companies in the basic materials space are Huntsman Corp. (HUN - Free Report) , Celanese Corp. (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) .
Huntsman has an expected long-term earnings growth rate of 8.5% and a Zacks Rank #1 (Strong Buy). Shares of the company have gained 21.9% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Celanese has an expected long-term earnings growth rate of 10% and carries a Zacks Rank #1. The stock has rallied 23.9% in a year.
Air Products has an expected long-term earnings growth rate of 16.1% and a Zacks Rank #2 (Buy). Shares of the company have risen 14.7% in a year’s time.
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