A number of chemical companies are gearing up to report their quarterly numbers on Jul 31. Per the Zacks Industry classification, the chemical industry is grouped under the broader Basic Materials sector, which is among the Zacks sectors that are expected to record the strongest gains in Q2. Earnings for the sector are projected to surge 55%, while revenues are expected to move up 24.8%, per the latest Earnings Preview.
The chemical industry is riding on an upswing in the global economy and continued demand strength across major end-use markets such as construction and automotive. Another positive for the industry is a recovery in demand in the energy space — a key chemical end-market that had been out of favor for a while. The recovery is being driven by a rebound in crude oil prices from their historic lows.
Despite a few headwinds, including a spike in raw materials costs and softness in agricultural commodity prices, chemical companies will likely continue the earnings momentum witnessed in Q1 into Q2 as the fundamental driving factors remain in place.
Strategic measures including productivity improvement, pricing actions and portfolio restructuring are expected to continue to drive the performance of chemical makers in Q2. Cost-cutting measures by chemical companies should continue to yield industry-wide margin improvement. Synergies from acquisitions should also lend support to earnings. Moreover, President Donald Trump’s business-friendly tax reform is a positive for U.S. chemical stocks.
We take a look at four chemical companies that are slated to report their results tomorrow.
Ecolab Inc. ECL will report Q2 earnings numbers ahead of the bell. The company has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.27. It has a Zacks Rank #4 (Sell), which we caution against going into the earnings announcement. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ecolab surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missed once, delivering an average positive surprise of around 1.1%.
For Q2, the Zacks Consensus Estimate for revenues is pegged at $3,705 million, reflecting an estimated rise of 7% year over year.
The Zacks Consensus Estimate for the Global Industrial segment is pegged at $1,317 million, reflecting an increase of 17.6% from the year-ago quarter’s figure.
For the Global Energy segment, the Zacks Consensus Estimate for revenues stands at $855 million, reflecting a rise of 8% on a year-over-year basis.
The Zacks Consensus Estimate for the Global Institutional segment is presently pegged at $1,314 million, reflecting a year-over-year rise of 7.6%.
Strong expected performance in the Global Industrial segment is likely to drive the top line in Q2. Further, an expected improvement in revenues in other segments is likely to help the company generate solid results. However, the company faces pricing pressure in the Energy segment, which is likely to affect profits in the upcoming quarterly results. (Read more: Will Global Industrial Unit Boost Ecolab's Q2 Earnings?)
Huntsman Corp. HUN will report Q2 results ahead of the bell. The company has an Earnings ESP of -4.05% as the Most Accurate Estimate stands at 83 cents while the Zacks Consensus Estimate is pegged at 87 cents. The stock carries a favorable Zacks Rank #3 (Hold) but its ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Huntsman topped the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 25.2%.
The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $2,276 million, reflecting a decline of 13% from the year-ago quarter.
The Zacks Consensus Estimate for Huntsman’s Polyurethanes segment is pegged at $1,167 million, reflecting a decline of 4.5% on a sequential comparison basis.
For the Performance Products unit, the Zacks Consensus Estimate for revenues stand at $617 million, reflecting a rise of 2.3% sequentially.
The Zacks Consensus Estimate for the Advanced Materials segment is presently pegged at $270 million, reflecting a sequential decline of 3.2%. The same for the Textile Effects unit stands at $215 million, representing an expected rise of 7.5% on a sequential comparison basis.
Huntsman is expected to benefit from strong demand dynamics and strength in its downstream businesses in the to-be-reported quarter. However, the company faces headwinds from higher raw material cost and plant outages, which may impact its Q2 results.
Huntsman Corporation Price and EPS Surprise
Huntsman Corporation price-eps-surprise | Huntsman Corporation Quote
Olin Corporation OLN will report Q2 results after the close. The company has an Earnings ESP of +4.59% as the Most Accurate Estimate stands at 41 cents while the Zacks Consensus Estimate is pegged at 39 cents. However, it has a Zacks Rank #4, which we caution against going into the earnings announcement.
In the last four quarters, the company delivered negative surprises thrice and posted in-line results once. The average earnings surprise was a negative 31.8%.
The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $1,773 million, reflecting an expected increase of 16.1% from the year-ago quarter.
Olin is expected to benefit from higher pricing of caustic soda in Q2. Higher expected pricing for chlorine, caustic soda and other chlorine-derivatives coupled with lower ethylene costs are likely to drive margin in the Chlor Alkali Products and Vinyls division. The company will also likely benefit from higher Epoxy product pricing. However, it faces headwinds from raw material cost inflation (for benzene and propylene). Its Winchester business is also seeing higher commodity material costs and reduced commercial demand.
Olin Corporation Price and EPS Surprise
Olin Corporation price-eps-surprise | Olin Corporation Quote
Ashland Global Holdings Inc. ASH will report fiscal Q3 results after the bell. The company has an Earnings ESP of -1.35% as the Most Accurate Estimate stands at $1.02 while the Zacks Consensus Estimate is pegged at $1.03. While the stock currently carries a Zacks Rank #2 (Buy), its ESP makes surprise prediction difficult.
Ashland surpassed the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average beat of 13.9%.
Revenues for fiscal Q3 are projected to rise 15.9% year over year, as the Zacks Consensus Estimate is currently $1,008 million.
The Zacks Consensus Estimate for Ashland’s Specialty Ingredients segment is pegged at $670 million, reflecting a rise of 13.4% on a year-over-year basis.
Ashland will likely gain from strong growth in its Specialty Ingredients unit. It is also taking appropriate pricing actions in response to raw material cost inflation, which is expected to benefit it in Q3. It should also gain from efforts to grow its premium mix, improve asset utilization and manage costs.
Ashland Global Holdings Inc. Price and EPS Surprise
Ashland Global Holdings Inc. price-eps-surprise | Ashland Global Holdings Inc. Quote
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