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LyondellBasell (LYB) Up 3.1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for LyondellBasell (LYB - Free Report) . Shares have added about 3.1% in that time frame, outperforming the S&P 500.

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

LyondellBasell Beats Earnings & Revenue Estimates in Q3

LyondellBasell’s net profits rose 5.4% year over year to $1,113 million or $2.85 per share in third-quarter 2018 from $1,056 million or $2.67 in the prior-year quarter.

Barring one-time items, adjusted earnings came in at $2.96 per share, which surpassed the Zacks Consensus Estimate of $2.73.

The company posted revenues of $10,155 million, up roughly 19.2% year over year. The figure beat the Zacks Consensus Estimate of $9,564 million.

Consolidated EBITDA declined around 5% year over year to $1,732 million.

Segment Review

In the Olefins & Polyolefins — Americas division, EBITDA increased around 19.1% year over year to $704 million. Olefin results increased by $30 million year over year. Polyolefins results increased around $100 million, mainly driven by polyethylene and polypropylene spread improvements.

The Olefins & Polyolefins — Europe, Asia, International segment witnessed a decline in EBITDA of around 55.6% year over year to $262 million. Olefin results fell roughly $100 million on a year-over-year basis. Consolidated polyolefins results declined around $110 million. Polyolefin spreads and sales volumes declined due to strong volumes in the year-ago quarter.

The Advanced Polymer Solutions (APS) segment saw a fall in EBITDA of around 43.5% year over year to $70 million. The addition of product lines from the A. Schulman acquisition partly offset margin and volume declines in polypropylene compounds.

EBITDA in the Intermediates and Derivatives segment went up around 25.3% on a year-over-year basis to $504 million. The same at the Refining segment totaled $84 million, up 45%. Crude throughput fell 8,000 barrels per day with planned maintenance in the quarter under review.

The Technology segment’s EBITDA surged 109% year over year to $98 million.

Financials

As of Sep 30, 2018, LyondellBasell had cash and liquid investments of $2 billion.

LyondellBasell repurchased 3.2 million shares with 387 million shares outstanding as of Sep 30, 2018. The company paid dividend worth $389 million in the third quarter.

Outlook

LyondellBasell expects to drive operational and business improvements in Refining, Technology and Intermediates and Derivatives businesses in the fourth quarter. The company said that it is well-positioned to capture value with expanded access to markets, incremental synergies from the integration of A. Schulman acquisition and the formation of the Advanced Polymer Solutions segment.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -9.2% due to these changes.

VGM Scores

Currently, LyondellBasell has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, LyondellBasell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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