It has been about a month since the last earnings report for Chemours (CC). Shares have added about 20.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Chemours due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Chemours’ Earnings Beat, Revenues Miss Estimates in Q1
Chemours registered a profit of $100 million or 61 cents per share in the first quarter of 2020, up 6.4% from a profit of $94 million or 55 cents per share a year ago.
Adjusted earnings were 71 cents per share for the quarter, which surpassed the Zacks Consensus Estimate of 51 cents.
Total revenues fell 5.2% year over year to $1,305 million. Lower volume in the company’s Fluoroproducts unit and lower global average prices across all segments more than offset higher volume in the Titanium Technologies unit. Further, revenues lagged the Zacks Consensus Estimate of $1,342.2 million.
Segment Highlights
Revenues in the Fluoroproducts segment fell 14.5% year over year to $600 million in the reported quarter. The decline was mainly caused by the impacts of the coronavirus outbreak in the Asia Pacific and many end markets worldwide.
Revenues in the Chemical Solutions unit were $92 million, down 31.3% year over year. The company saw lower prices in the quarter mainly due to lower raw material price pass-throughs and regional customer mix.
Revenues in the Titanium Technologies division were $613 million, up 10.5% from the prior-year quarter. The increase was attributable to a higher volume of Ti-Pure titanium dioxide.
Financials
Chemours ended the quarter with cash and cash equivalents of $714 million, up 2.4% year over year. Long-term debt was $4,012 million, up 1.2% year over year.
Cash flows provided by operating activities were $44 million in the quarter against cash used for operating activities of $44 million a year ago.
Outlook
The company withdrew its guidance for 2020 due to uncertainties created by the coronavirus outbreak.
Chemours stated that it is taking actions to cut costs by reducing overhead, discretionary spend and capital expenditure for 2020. Notably, the company reduced capital expenditure from $400 million to $275 million for 2020. Also, it launched a program to lower costs by $160 million for 2020 to enhance financial flexibility.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -82.5% due to these changes.
VGM Scores
At this time, Chemours has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It’s no surprise Chemours has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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