Methanex (MEOH) Q1 Earnings Beat Estimates, Revenues Lag

Methanex Corporation (NASDAQ:MEOH) recorded profit (attributable to shareholders) of $38 million or 50 cents per share in the first quarter of 2019, down around 78% from $169 million or $2.00 in the year-ago quarter. The bottom line in the reported quarter was hurt by lower methanol prices.

Adjusted earnings per share (barring one-time items) in the quarter were 73 cents, which beat the Zacks Consensus Estimate of 71 cents.

Revenues dropped roughly 24% year over year to $733 million in the quarter and missed the Zacks Consensus Estimate of $795 million.

Operational Highlights

Production for the quarter was 1,808,000 tons, down from 1,943,000 in the year-ago quarter. Total sales volumes were 2,723,000 tons, down around 3% year over year.

Average realized price for methanol was $331 per ton in the quarter, down from $402 per ton in the prior-year quarter. The decline was due to reduced average non-discounted posted prices across North America, Asia Pacific and Europe.

Financials

For the quarter, cash flow from operating activities was $213 million, down 13% year over year. The company had cash and cash equivalents of $285.1 million, down around 23% year over year.

Methanex returned $31 million to shareholders through dividend and share repurchases during the quarter. The company’s board also approved a 9% hike to its quarterly dividend to 36 cents per share from 33 cents.

Outlook

Moving ahead, Methanex expects methanol prices to be stable in the second quarter. It also expects its production levels to be lower on a sequential comparison basis in the second quarter. Moreover, the company expects adjusted EBITDA to be lower in the second quarter sequentially.

Price Performance

Shares of Methanex have lost 9% in the past year compared with the industry’s 20% decline.

Zacks Rank and Stocks to Consider

Methanex currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. (NYSE:SAND) , Flexible Solutions International Inc. (NYSE:FSI) and W. R. Grace & Co. (NYSE:GRA) .

Sandstorm Gold has an expected earnings growth rate of 200% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 14% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 100% in the past year.

W. R. Grace has an expected earnings growth rate of 10.4% for the current year and carries a Zacks Rank #2. Its shares have gained around 10% in the past year.

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