Chemical Stocks' Earnings On Oct 27: DOW, EMN, APD & PX

A few major chemical companies are scheduled to report their quarterly numbers on Oct 27. The chemical industry falls under the broader Basic Materials sector. Based on the earnings scorecard as of Oct 21, 20% of the sector participants on the S&P 500 Index have already unveiled their quarterly numbers. Earnings for these companies are up 29.4% from the same period last year on 1.1% lower revenues, per the latest Earnings Preview report.

Among the seven out of the 16 Zacks sectors expected to see a fall in earnings this reporting cycle, the Basic Materials sector is one as it is projected to witness an earnings decline of 1.3% on 3.1% lower sales.

The chemical industry is gradually gaining strength on the back of continued momentum in the automotive market and positive trends in the construction space. Chemical makers are gaining from strategic actions including aggressive cost management and productivity actions as well as acquisitions.

However, the industry remains hamstrung by a spate of challenges including a slowdown in China, sluggish demand in the energy space, soft agriculture market fundamentals and a choppy Europe.

We take a sneak peek into four chemical companies that are gearing up to report their quarterly results on Oct 27.

The Dow Chemical Company (NYSE:DOW) will report third-quarter results ahead of the bell. The company is expected to come up with a positive earnings surprise as it sports a Zacks Rank #2 (Buy) and has an Earnings ESP of +1.25%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

The U.S. chemical kingpin has an impressive surprise history, having surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 18.11%. Dow remains committed to its portfolio management actions and operational execution amid a still difficult operating backdrop. While currency and challenges in the agriculture market remain as headwinds, the company’s productivity improvement, cost control and growth actions are expected to drive earnings in the to-be-reported quarter. (Read more: Dow Chemical Q3: Another Earnings Beat in Store?)

Eastman Chemical Co. (NYSE:EMN) , which will report third-quarter earnings numbers after the bell, is expected to come up with a positive earnings surprise as it has an Earnings ESP of +1.20% and carries a favorable Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Eastman Chemical beat the Zacks Consensus Estimate in three of the trailing four quarters with an average positive surprise of 3.42%. While Eastman Chemical faces pricing and currency headwinds, it should gain from synergies of acquisitions, cost-cutting actions and continued momentum in its specialty businesses. (Read more: Eastman Chemical Q3 Earnings: Stock Poised to Beat?)

Air Products and Chemicals, Inc. (NYSE:APD) will report its fiscal fourth-quarter numbers ahead of the bell. The company has an Earnings ESP of +1.01% as the Most Accurate estimate stands at $2.01 cents while the Zacks Consensus Estimate is pegged at $1.99. However, the company carries a Zacks Rank #5 (Strong Sell), which we caution against ahead of earnings release. Air Products outperformed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 1.86%.

While currency is expected to remain a headwind, the company’s aggressive cost-control measures, synergies from acquisitions and sustained pricing power should support its earnings in the to-be-reported quarter. (Read more: Air Products: What Will Q4 Earnings Release Unveil?)

Praxair Inc. (NYSE:PX) will report its third-quarter results before the bell. The company has an Earnings ESP of -0.71% as the Most Accurate estimate stands at $1.39 while the Zacks Consensus Estimate is pegged at $1.40. The company also carries a Zacks Rank #4 (Sell), which we caution against ahead of earnings release. Praxair beat the Zacks Consensus Estimate in three of the four trailing quarters with an average positive surprise of 1.49%.

The current global economic uncertainties and weakness in the industrial end-markets in the U.S. are restricting Praxair’s growth momentum. In addition, unfavorable currency movements have been adversely impacting the company’s international trade. (Read more: Praxair Q3 Earnings Preview: Stock to Disappoint?)

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