It has been about a month since the last earnings report for Kronos Worldwide (KRO). Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kronos Worldwide due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kronos Worldwide’s Q3 Earnings Miss, Sales Top Estimates
Kronos Worldwide recorded profit of $17.9 million or 16 cents per share in third-quarter 2019, down 45% from $32.6 million or 28 cents in the year-ago quarter. Earnings per share also missed the Zacks Consensus Estimate of 19 cents.
Results in the reported quarter were hurt by lower average selling prices as well as higher raw materials and other production costs, partly offset by increased sales volumes.
Net sales rose 7% year over year to $437.4 million as higher sales volumes offset TiO2 selling prices. The figure beat the Zacks Consensus Estimate of $427.5 million.
Volumes and Pricing
Average TiO2 selling prices fell 5% year over year in the reported quarter.
The company’s TiO2 sales volume rose 17% year over year on higher sales across all key markets. TiO2 production volumes in the third quarter were up 4% on a year-over-year basis.
Profit in the TiO2 segment was $36.8 million in the reported quarter, down around 40% year over year. The decline reflects lower TiO2 selling prices and higher raw materials as well as other production costs that more than offset higher sales volumes.
Kronos Worldwide ended the quarter with cash and cash equivalents of $385.8 million, down 11% year over year. Long-term debt was $434.6 million, down 7% year over year.
Cash flow from operating activities was $123.8 million for the first nine months of 2019, down from $199 million in the year-ago period.
Kronos Worldwide expects production volumes to be modestly higher year over year in 2019. The company also sees sales volumes for 2019 to be higher year over year based on expected production levels and assuming global economic conditions to remain stable. The company will continue to examine current and expected customer demand levels and align production and inventories accordingly.
The company expects sales to be higher year over year in 2019, resulting from higher expected sales volumes, partly offset by lower anticipated average selling prices.
Moreover, Kronos Worldwide expects its income from operations to be lower year over year in 2019 as benefits of higher expected sales volumes are expected to be more than offset by reduced expected average selling prices and increased raw material and other operating costs.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -16.67% due to these changes.
Currently, Kronos Worldwide has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Kronos Worldwide has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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