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Chemical Stock Earnings Slated on Jul 26: APD, EMN & More

A few prominent chemical companies are scheduled to report quarterly numbers on Jul 26. The chemical industry is riding an upturn in the global economy and strength across major end-use markets such as construction and automotive. Improving fundamentals in the energy space driven by an upswing in crude oil prices also augur well for the industry.

Notwithstanding 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.

Cost-cutting measures and productivity improvement actions by chemical companies should continue to lead to industry-wide margin improvements in Q2. Moreover, a number of chemical makers are taking appropriate pricing actions (reflected by hikes in chemical prices) to offset raw materials cost inflation, which should provide margin benefits.

Chemical companies also remain actively focused on mergers and acquisitions to diversify and perk up growth. Synergies from acquisitions should also lend support to earnings in Q2.

President Donald Trump's business-friendly tax reform also contributed to the impressive performance of U.S. chemical makers in Q1 and would remain a major tailwind in Q2. The newly introduced tax reform significantly reduces the corporate tax rate from 35% to 21%, which is a positive for chemical stocks. This is expected to boost their bottom line and improve cash flows.

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 52%, while revenues are expected to move up 24.3%, per the latest Earnings Preview .

We take a look at four chemical companies that are gearing up to report their results tomorrow.

Air Products & Chemicals, Inc.APD will report fiscal Q3 earnings numbers ahead of the bell. The company has an Earnings ESP of -0.50%. The Zacks Consensus Estimate for Q3 is pegged at $1.84. The company also 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 .

Air Products surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of around 4.2%.

The Zacks Consensus Estimate for Q3 revenues is currently pegged at $2,291 million, reflecting an estimated rise of roughly 8% year over year.

The Zacks Consensus Estimate for the Industrial Gases - America segment's Q3 revenues is $972 million, reflecting a 4.5% rise from the year-ago figure. Operating income is also expected to increase 4% year over year as the Zacks Consensus Estimate for the same is pegged at $245 million.

The segment is expected to gain from higher volumes and price increase actions. However, Air Products expects higher maintenance cost in the quarter due to several major plant turnarounds. This may impact overall operating costs as well as margins in this unit.

Air Products' Industrial Gases - Asia segment's revenues are expected to increase 18% from the year-ago quarter. The Zacks Consensus Estimate for the same is pegged at $633 million. For this segment, the Zacks Consensus Estimate for Q3 operating income is at $170 million, reflecting a year-over-year increase of 14%. The company gained from higher volumes and pricing in fiscal Q2 and expects to continue to benefit from the same in Q3.

The Zacks Consensus Estimate for revenues at the Industrial Gases - EMEA segment is projected at $523 million, reflecting an estimated rise of 16% year over year. Segment income is also expected to increase 14% year over year as the Zacks Consensus Estimate stands at $107 million. Volume gains and pricing actions are expected to drive results.

The Industrial Gases - Global segment revenues are expected to decline 17% year over year. The Zacks Consensus Estimate is pegged at $156 million for the same. Segment income is expected to fall 35% year over year and the Zacks Consensus Estimate for the same is pegged at $18.17 million.

Air Products' strategic investments in high-return projects, new business wins and acquisitions are also expected to aid results. Higher expected volumes and pricing along with the company's productivity actions are also likely to support margins in the to-be-reported quarter. (Read more: What's in the Offing for Air Products in Q3 Earnings? )

Air Products and Chemicals, Inc. Price and EPS Surprise

Air Products and Chemicals, Inc. Price and EPS Surprise | Air Products and Chemicals, Inc. Quote

Eastman Chemical CompanyEMN will report Q2 results after the close. The company is expected to come up with a positive earnings surprise as it has an Earnings ESP of +1.25% and a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Eastman Chemical topped the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings beat of roughly 17.8%.

Revenues for Eastman Chemical for Q2 are projected to rise roughly 7.7% year over year as the Zacks Consensus Estimate for the quarter is currently pegged at $2,606 million.

Revenues from Eastman Chemical's Additives and Functional Products division are anticipated to witness a 2.6% rise from Q1 as the Zacks Consensus Estimate for Q2 is pegged at $963 million.

Advanced Materials unit's revenues are expected to increase 2.9% on a sequential comparison basis as the Zacks Consensus Estimate for Q2 is $713 million.

Revenues for the Chemical Intermediates segment are projected to fall 4.7% from Q1 as the Zacks Consensus Estimate for Q2 stands at $696 million.

Moreover, the Fibers segment is expected to witness a 9.8% decline in revenues sequentially as the Zacks Consensus Estimate is pegged at $221 million for Q2.

Eastman Chemical's high margin products and its aggressive cost management actions are likely to continue to drive its earnings in the second quarter. The company should gain from sustained growth of its high margins specialty products. However, the company is exposed to raw material cost inflation, which is weighing on its margins. (Read more: Can Eastman Chemical Sustain Earnings Streak in Q2? )

Eastman Chemical Company Price and EPS Surprise

Eastman Chemical Company Price and EPS Surprise | Eastman Chemical Company Quote

Praxair Inc.PX will report Q2 results before the bell. It has an Earnings ESP of +0.06%. The Zacks Consensus Estimate is pegged at $1.70. However, the company has a Zacks Rank #4, which makes surprise prediction difficult.

Praxair surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 3.7%.

Revenues for Q2 are projected to rise 6.7% year over year, as the Zacks Consensus Estimate is currently $3,025 million.

The Zacks Consensus Estimate for the company's North America segment's revenues stands at $1,603 million, reflecting an increase of 2.6% on a sequential basis. The same for the South America segment's revenues stands at $366 million, flat sequentially. Moreover, the Zacks Consensus Estimate for the Asia segment's revenues is pegged at $489 million for Q2, reflecting a 2.7% sequential rise. Per the Zacks model, the Europe segment is expected to log sales of $426 million for Q2, essentially flat with Q1.

For the North America segment, Praxair will gain from rising demand for gases for industrial use, especially in the metals, chemicals, downstream energy and manufacturing end markets. The South America segment is exposed to political uncertainties in Brazil that have somewhat stalled growth prospects in the region. Moreover, growth in demand for gases for the use in electronics end market, especially by Chinese and Korean customers, is believed to be a boon for the Asia segment. (Read more: Praxair to Report Q2 Earnings: What's in the Offing? )

Praxair, Inc. Price and EPS Surprise

Praxair, Inc. Price and EPS Surprise | Praxair, Inc. Quote

Axalta Coating Systems Ltd.AXTA will report its Q2 earnings numbers ahead of the bell. The company has an Earnings ESP of +6.67% as the Most Accurate estimate stands at 38 cents, while the Zacks Consensus Estimate is pegged at 36 cents. However, it has a Zacks Rank #5 (Strong Sell), which we caution against going into the earnings announcement.

In the last four quarters, the company delivered better-than-expected results thrice and missed once. The average earnings surprise was a positive 6.4%.

The Zacks Consensus Estimate for revenues stands at $1,220 million, reflecting an increase of 11.4% from the year-ago quarter.

The Zacks Consensus Estimate for sales of the company's Performance Coatings unit is pegged at $776 million, reflecting an expected increase of 6.4% on a sequential comparison basis. The same for the Transportation Coatings division stands at $447 million, representing an expected sequential growth of 2.3%.

While the company remains exposed to headwinds from higher raw material costs, it should gain from its cost-reduction and pricing actions as well as contributions from acquisitions in the to-be-reported quarter.

Axalta Coating Systems Ltd. Price and EPS Surprise

Axalta Coating Systems Ltd. Price and EPS Surprise | Axalta Coating Systems Ltd. Quote

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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