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Key Predictions for Q3 Earnings Reports of DWDP, CC, PAH

A few chemical companies are lined up to report their quarterly numbers on Nov 2.  Per the Zacks Industry classification, the chemical industry is grouped under the broader Basic Materials sector. Overall, third-quarter earnings for the sector are projected to decline 3.5% while revenues are expected to increase 10.7%, per the latest Earnings Preview.

The chemical industry is back on the growth path after being in limbo for a spell. The industry’s upturn is supported by an upswing in the world economy and strength across major end-use markets such as construction and automotive.

Despite a few lingering challenges, chemical companies are expected to continue the earnings momentum witnessed in the second quarter. This is because the fundamental driving factors remained firmly in place.

Strategic measures including productivity improvement, pricing actions, portfolio restructuring and earnings-accretive acquisitions are expected to drive the performance of chemical makers in the third quarter. Cost-cutting measures and productivity improvement actions by chemical companies should continue to yield industry-wide margin improvements. Synergies from acquisitions should also lend support to earnings.  

Let's see what's in store for these three chemical companies that are set to report third-quarter results this Thursday.

DowDuPont Inc. DWDP will report ahead of the bell. The company has an Earnings ESP of +23.60% as the Most Accurate estimate stands at 55 cents while the Zacks Consensus Estimate is pegged at 45 cents. The company carries a Zacks Rank #5 (Strong Sell). We caution against Sell-rated (Zacks Rank #4 or 5) stocks going into the earnings announcement. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

DowDuPont was formed through the $130-billion mega-merger of chemical giants, The Dow Chemical Company and E.I. du Pont de Nemours & Company (DuPont). The ‘merger of equals’ transaction was closed on Aug 31. This will mark the combined company’s first post-merger earnings report.

The Zacks Consensus Estimate for revenues for the third quarter stands at $17,501 million.

While higher feedstock costs, weak agriculture market conditions and the unfavorable impacts of hurricanes pose as headwinds, DowDuPont is expected to gain from strong demand in most of its core end-markets as well as higher prices and volumes in the third quarter. (Read more: DowDuPont Q3 Earnings Preview: What to Expect?)

The Chemours Company CC will report its results after the close. It has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.01. While the stock carries a favorable Zacks Rank #3 (Hold), its 0.00% ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chemours beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the other two, delivering an average positive surprise of 12.1%.

The Zacks Consensus Estimate for revenues is pegged at $1,571 million, reflecting a rise of 12.4% from the year-ago quarter.

Chemours is expected to gain from its transformation plan initiatives, sustained efforts to reduce costs and strength across its major end markets.  The company should also continue to benefit from increased customer adoption of both Ti-Pure titanium dioxide and Opteon refrigerants in the to-be-reported quarter.

Chemours Company (The) Price and EPS Surprise

 

Chemours Company (The) Price and EPS Surprise | Chemours Company (The) Quote

Platform Specialty Products Corporation PAH will report before the bell. The stock has an Earnings ESP -8.57% as the Most Accurate estimate stands at 16 cents while the Zacks Consensus Estimate is pegged at 18 cents. The stock carries a Zacks Rank #4 (Sell).

The company posted better-than-expected results in each of the last four quarters. The average earnings surprise was a positive 26.3%.

The Zacks Consensus Estimate for revenues stands at $920.8 million, reflecting a rise of 3.3% from the year-ago quarter. While the company faces challenges from a slowdown in U.S. automotive production, weak crop commodity prices and difficult year-over-year comparison in the electronics business in second-half 2017, it is expected to gain from cost-reduction initiatives, execution of synergy plans, growth of higher margin products and product mix improvement.

The Zacks Consensus Estimate for the company’s Agricultural Solutions unit sales is pegged at $451 million, reflecting an increase of 3.4% on a year-over-year basis. The same for the Performance Solutions division stands at $482 million, representing year-over-year growth of 5.9%.

The Zacks Consensus Estimate for adjusted EBITDA for Agricultural Solutions is pegged at $85 million, reflecting a 6.3% rise year over year. The same for Performance Solutions stands at $119 million, representing year-over-year growth of 8.2%.

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Chemours Company (The) (CC): Free Stock Analysis Report
 
Platform Specialty Products Corporation (PAH): Free Stock Analysis Report
 
Dow Chemical Company (The) (DWDP): Free Stock Analysis Report
 
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