Chemical Stocks' Q2 Earnings To Watch On Aug 8: IFF, PAH, CC

The second-quarter earnings season is in its last leg with 414 companies on the S&P 500 index having already reported. Earnings for these companies are down 4.5% while revenues have declined 1%, as per the latest Earnings Outlook report. The decline, however, has shown a moderation when compared with the previous quarter.

Considering the actual results from the S&P 500 members that have reported thus far, total Q2 earnings are expected to skid 3.1% year over year on 0.4% lower revenues with the Energy sector being a major drag.

In this write-up, we put the spotlight on a few chemical companies that are scheduled to report their quarterly results on Aug 8. The chemical industry remains on a slow road to recovery amid a still-fragile macro environment. Chemical makers are gaining from strategic measures including expansion into high-growth markets, aggressive cost management and productivity actions as well as acquisitions. However, the industry remains hamstrung by a number of headwinds including a still weak agriculture market, currency headwinds, weak demand in the energy space, Eurozone’s feeble recovery and a sluggish Chinese economy.

As per the Zacks Industry classification, the chemical industry is grouped under the broader Basic Materials sector. Based on the earnings scorecard as of Aug 4, 95% of the sector participants on the S&P 500 index have unveiled their quarterly numbers. Earnings for these companies are down 11.8% from the same period last year on 9.1% lower revenues.

Basic Materials is among the sectors that are expected to see double-digit year-over-year earnings decline in the second-quarter. The sector’s earnings are expected to drop 11.7% in the quarter, considering the companies that are yet to report. Revenues for the sector are likely to fall 7.6%.

We take a sneak peek into three chemical companies that are gearing up to report second-quarter results on Aug 8.

International Flavors & Fragrances Inc. (NYSE:IFF) is expected to come up with a positive earnings surprise as it carries a Zacks Rank #2 (Buy) and an Earnings ESP of +0.71%. In the four trailing quarters, the company posted better-than-expected earnings results in three while lagged in one. International Flavors & Fragrances is well positioned to benefit from growing demand for flavors and fragrances, especially in the emerging countries. (Read more: Can International Flavors Surprise in Q2 Earnings?)

Platform Specialty Products Corporation (NYSE:PAH) has an Earnings ESP of -16.67% as the Most Accurate estimate stands at 15 cents while the Zacks Consensus Estimate is pegged at 18 cents. The company carries a favorable Zacks Rank #3 (Hold), but its negative ESP makes surprise prediction difficult. The company delivered an average negative earnings surprise of 18.27% over the trailing four quarters.

The Chemours Company (NYSE:CC) has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 13 cents. The stock holds a Zacks Rank #3, but its 0.00% ESP makes surprise prediction difficult. Chemours beat estimates in two of the trailing four quarters while missed in the other two.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>