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Materion (MTRN) to Report Q3 Earnings: What's in the Offing?

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Materion Corporation MTRN is set to release third-quarter 2019 results before the opening bell on Oct 24.

The integrated producer of high performance advanced engineered materials beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive surprise of 23.59%.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for the third quarter of 2019 is currently pegged at $295.7 million, indicating a decline of 0.5% from the year-ago quarter. The estimate for earnings stands at 82 cents, suggesting an improvement of 20.59% from the prior-year reported figure. Notably, the earnings estimate for the to-be-reported quarter has been stable in the last 30 days.

Materion Corporation Price and EPS Surprise


A Sneak Peak into Q2 Performance

Materion had reported earnings per share of 88 cents in the second quarter, a year-over-year improvement of 63%. However, revenues declined 4% year over year to $297.8 million in the quarter.

Materion’s shares have gained 14.2% year to date, against the industry’s decline of 3%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Materion’s third-quarter results are likely to reflect the benefits of cost saving actions and manufacturing performance improvement initiatives. Further, strength in end markets like aerospace and defense, energy, to name a few, are likely to have negated the impact of automotive and semiconductor markets in the quarter to be reported.

During the third quarter, the semiconductor and automotive markets continued to be weak, which might reflect on the company’s sales. The semiconductor end market remained weak primarily owing to reduced demand for smartphone devices. Meanwhile, the automotive end market remained soft, particularly in Europe and Asia. However, given that the company caters to a wide range of end-markets, strength in other markets such as aerospace and defense, energy and telecom data center is anticipated to have offset these impacts. Further, the change in precious metal and copper prices is likely to have impacted Materion’s net sales in the third quarter of 2019.

The company’s commercial and manufacturing performance improvement initiatives and general cost reductions is anticipated to get reflected in the third-quarter margins. Nevertheless, the bottom line is expected to reflect higher SG&A expenses owing to investments to execute strategic initiatives for commercial excellence and variable costs to improve revenues.

The company expects earnings in the third quarter of 2019 earnings to be approximately 10% to 20% higher than prior-year quarter’s adjusted earnings of 68 cents.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Materion this season. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.

Earnings ESP: The Earnings ESP for the company is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Materion currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Agnico Eagle Mines Limited AEM, scheduled to release earnings on Oct 23, has an Earnings ESP of +7.93% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross Gold Corporation (KGC - Free Report) , scheduled to release earnings on Nov 6, has an Earnings ESP of +25.93% and a Zacks Rank #1.

Barrick Gold Corporation GOLD, scheduled to release earnings on Nov 6, has an Earnings ESP of +1.89% and a Zacks Rank #3.

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