Plastic Stocks to Watch for Q2 Earnings on Jul 27: KRA, POL

A couple of plastic companies are slated to report their second-quarter results on Jul 27. The Q2 results released so far reflect modest improvement over the lackluster levels seen in the last couple of quarters. The overall picture remains dull with total Q2 earnings – factoring in the actual results from the 126 S&P 500 members that reported till Jul 22 – expected to decline 3.4% year over year, while revenues are projected to fall 0.5%, per the latest Earnings Trends report.

This, if it eventually happens, will mark the fifth consecutive quarter of an earnings decline for the benchmark index. The Energy sector remains a major dampener with total earnings forecast to plunge 78.7% year over year on 25.4% lower revenues.

The plastic industry falls under the broader Basic Materials sector which is among nine of the 16 Zacks sectors that are expected to see negative earnings growth in the second quarter.

Based on the earnings scorecard as of Jul 22, earnings for the sector participants in the S&P 500 index are up 1.2% from the same period last year while revenues have decreased 4.8%. The growth picture for the Basic Materials sector looks glum as the sector is expected to see an earnings decline of 13.9% on 7.7% lower sales.

Let’s take a peek at two plastic companies that are scheduled up to report their second-quarter numbers on Jul 27.

Kraton Performance Polymers Inc. KRA has an Earnings ESP of +4.35% as the Most Accurate estimate stands at 72 cents while the Zacks Consensus Estimate is pegged at 69 cents. The stock holds a Zacks Rank #4 (Sell) which lowers the predictive power of the ESP. Kraton beat the Zacks Consensus Estimate in two of the trailing four quarters while missing in the other two.

PolyOne Corporation POL has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 61 cents. The stock carries a favorable Zacks Rank #3 (Hold), but its 0.00% ESP makes surprise prediction difficult. The company outperformed the Zacks Consensus Estimate in two of the trailing four quarters while missed in the other two.

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