Chemical Stock Q4 Earnings Due on Jan 27: DOW, EMN, CE & OLN

A few prominent chemical companies are scheduled to come up with their quarterly numbers on Jan 27. Per the Zacks industry classification, the chemical industry falls under the broader Basic Materials sector. Overall earnings for the sector are projected to rise 80.3% on 29% higher revenues in the fourth quarter, per the latest Earnings Trends. The projected growth reflects a slowdown from the 136.1% rise in earnings on a 38.7% increase in revenues witnessed in the third quarter.

An upturn in end-market demand from the coronavirus-induced slowdown is likely to have aided the performance of chemical companies in the fourth quarter.

Chemical makers are benefiting from a strong rebound in demand in key end-use markets, including automotive, building & construction and electronics, from the pandemic-led downturn. These companies are seeing higher demand from the automotive market, notwithstanding the chip shortage, which continues to affect automotive production globally. Demand in construction, packaging and healthcare also remains strong. Higher industrial demand is expected to have boosted sales volumes and the top line of chemical companies in the fourth quarter.

However, chemical companies’ fourth-quarter results are expected to reflect the impacts of raw material cost inflation as well as higher supply chain and logistics costs. Supply chain disruptions due to coronavirus and weather-related events have led to a spike in raw material costs. Hurricane Ida dealt another blow to the supply chain. Plant shutdowns associated with Ida further squeezed the supply of raw materials and pushed up their prices. The lingering impacts of supply chain and logistics constrains are likely to reflect on chemical companies’ fourth-quarter results.

Nevertheless, the benefits of strategic measures, including actions to raise selling prices of chemical products to counter the cost inflation and tightness in the supply chain, productivity improvement measures and operational efficiency improvement, might reflect on the results of the companies in this space.

We take a look at four chemical companies that are gearing up to report their fourth-quarter results on Jan 27.

Dow Inc. DOW will report earnings numbers before the bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -2.79% and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for the company’s revenues is currently pegged at $14,325 million, suggesting a rise of 33.8% year over year. The consensus estimate for earnings is $2.04.

The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters at an average of 14.1%.

Dow’s fourth-quarter results are expected to reflect the benefits of cost-reduction initiatives, higher prices and strong demand across a number of end markets. However, plant turnaround costs and raw material and energy cost inflation are likely to have affected its fourth-quarter performance. (Read more: Dow Gears Up for Q4 Earnings: What's in the Cards?)

Dow Inc. Price and EPS Surprise

Dow Inc. price-eps-surprise | Dow Inc. Quote

Eastman Chemical Company (NYSE:EMN) EMN will come up with its quarterly results after the closing bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -1.62% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Eastman Chemical’s revenues for the fourth quarter is pegged at $2,425 million, which suggests a year-over-year increase of 10.9%. The consensus estimate for earnings is $1.89.

Eastman Chemical beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. The company has a trailing-four quarter earnings surprise of 5.3%, on average.

The company is expected to have benefited from its cost actions and revenues from innovation in the fourth quarter. However, it is likely to have faced challenges associated with supply and logistics issues and higher raw material costs in the quarter. (Read more: What's in Store for Eastman Chemical's Q4 Earnings?)

Eastman Chemical Company Price and EPS Surprise

Eastman Chemical Company price-eps-surprise | Eastman Chemical Company Quote

Celanese (NYSE:CE) Corporation CE will report results after the closing bell. Our proven model predicts an earnings beat for the company this time around. This is because it has an Earnings ESP of +2.98% and a Zacks Rank #3.

The Zacks Consensus Estimate for Celanese’s revenues for the fourth quarter is pegged at $2,251 million, which suggests a year-over-year increase of 41.5%. The consensus estimate for earnings is $5.05.

The company beat the Zacks Consensus Estimate for earnings in all of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 12.7%, on average.

Benefits from productivity actions, investments in high-return organic projects and strategic acquisitions are likely to be reflected on the fourth-quarter performance. However, the company is likely to have faced headwinds stemming from higher input costs due to supply constraints. (Read more: Celanese to Report Q4 Earnings: What's in the Offing?)

Celanese Corporation Price and EPS Surprise

Celanese Corporation price-eps-surprise | Celanese Corporation Quote

Olin (NYSE:OLN) Corporation OLN will report earnings numbers after the closing bell. Our proven model predicts an earnings beat for the company this time around. This is because it has an Earnings ESP of +1.95% and a Zacks Rank #3.

The Zacks Consensus Estimate for Olin’s revenues is pegged at $2,338 million, which suggests a year-over-year increase of 41.3%. The consensus estimate for earnings is $2.53.

The company beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missing the same once. It has a trailing four-quarter negative earnings surprise of roughly 0.5%, on average.

The company’s productivity actions, the Lake City U.S. Army ammunition contract and higher prices are likely to get reflected on its fourth-quarter numbers. However, it is likely to have faced headwinds stemming from higher raw material costs and the impacts of seasonality stemming from year-end holiday slowdowns. (Read more: Olin to Report Q4 Earnings: What's in the Offing?)

Olin Corporation Price and EPS Surprise

Olin Corporation price-eps-surprise | Olin Corporation Quote

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