Yahoo Finance What's in Store for These 3 Chemical Stocks in Q1 Earnings?
Chemical companies are expected to have benefited from a recovery in demand across several key end markets and a moderation of de-stocking activities in the March quarter. The results of these companies are also likely to have been supported by the benefits of pricing and cost-saving actions.
Per the Zacks industry classification, the chemical industry falls under the broader Basic Materials sector. The Q1 earnings picture for this sector looks lackluster. Basic Materials is among the Zacks sectors that are expected to see the biggest decline in earnings in the first quarter. Overall earnings for the space are projected to fall 28.8% on 6.3% lower revenues, per the latest Earnings Trends report.
A few prominent chemical companies are lined up to report their quarterly numbers tomorrow. Let's see how things have shaped up for Dow Inc. DOW, Eastman Chemical Company EMN and Olin Corporation OLN ahead of their first-quarter releases.
The chemical space reeled under the effects of the demand slowdown in certain major markets in 2023. The sluggishness in the building & construction market and the de-stocking in consumer electronics played spoilsport. In North America, uncertainties surrounding the U.S. housing market weighed on building & construction. The housing market bore the brunt of interest rate hikes last year. The demand destruction in industrial and consumer durables hurt the volumes of chemical companies. Lower consumer spending due to inflationary pressures in Europe and a slow recovery in China also impacted demand.
Nevertheless, demand for chemicals in the automotive market has picked up, aided by an uptick in automotive production on an improved supply of semiconductors. The resolution to the six-week United Auto Workers strike also led to a rebound in chemical demand in automotive. Moreover, chemical companies are seeing a recovery in demand across the construction and electronics markets. Demand in the healthcare market also remains steady. A rebound in drilling activities on the back of an uptick in oil prices has led to demand recovery in the energy space.
On a further positive note, customer inventory de-stocking has largely ended, leading to low inventory levels. The de-stocking in 2023 was primarily driven by high inflation and the lingering impacts of the pandemic that affected customer spending. Healthy end-market demand is expected to have supported sales volumes and the top line of chemical companies in the March quarter.
Moreover, the benefits of self-help actions, including actions to raise the selling prices of chemical products, productivity improvement measures and operational efficiency improvement, might reflect on the results of the companies in this space. A moderation in raw material and energy costs driven by the easing of supply-chain disruptions is also expected to have acted as a tailwind.
We take a look at three chemical companies that are gearing up to report their first-quarter results on Apr 25.
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Dow will report results ahead of the bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -1.69% and a Zacks Rank #3.
The Zacks Consensus Estimate for first-quarter revenues for Dow is currently pegged at $10,839.1 million, suggesting a decline of roughly 4.4% year over year. The consensus estimate for earnings is 47 cents.
The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters at an average of 20.8%.
Dow is expected to have benefited from firm demand across a number of end markets and its cost-saving and productivity actions. The benefits of DOW’s restructuring programs are likely to be reflected on its bottom line in the first quarter. However, Dow is likely to have faced headwinds from plant turnaround costs and outages. (Read more: Dow Warms Up to Q1 Earnings: What's in the Offing?)
Dow Inc. Price and EPS Surprise
Dow Inc. price-eps-surprise | Dow Inc. Quote
Eastman Chemical will report earnings numbers after the closing bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -3.13% and a Zacks Rank #2.
The Zacks Consensus Estimate for revenues for the first quarter for Eastman Chemical is currently pinned at $2,262.2 million, which reflects a year-over-year decline of 6.2%. The consensus estimate for earnings is $1.41.
The company surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of around 9.9% on average.
Eastman Chemical is expected to have benefited from growing new business revenues in end markets resulting from its innovative-driven growth model. Its cost-cutting and productivity initiatives are also expected to have aided margins. EMN’s operational transformation efforts are likely to have resulted in decreased operating costs. (Read more: Eastman Chemical to Post Q1 Earnings: What's in Store?)
Eastman Chemical Company Price and EPS Surprise
Eastman Chemical Company price-eps-surprise | Eastman Chemical Company Quote
Olin will come up with its quarterly results after the bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -8.34% and a Zacks Rank #3.
The Zacks Consensus Estimate for OLN’s revenues for the first quarter is pegged at $1,646.2 million, which suggests a year-over-year decline of roughly 11.2%. The consensus estimate for earnings is 38 cents.
Olin’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, while missed the same once. It has a trailing four-quarter earnings surprise of roughly 17.9%, on average.
The company is expected to have benefited from its value accelerator initiative, which is likely to have contributed to improved margins in the first quarter. Higher commercial ammunition shipments and increased military sales are also likely to have supported results in its Winchester unit. However, OLN’s chemical businesses are expected to have been adversely impacted by the challenging global economic situation and pricing pressure.
Olin Corporation Price and EPS Surprise
Olin Corporation price-eps-surprise | Olin Corporation Quote
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Dow Inc. (DOW) : Free Stock Analysis Report
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Olin Corporation (OLN) : Free Stock Analysis Report
