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LyondellBasell (LYB) Q1 Earnings: What's in the Cards?
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LyondellBasell Industries (LYB - Free Report) is set to release its first-quarter 2017 results ahead of the bell on Apr 28.
Last quarter, the Netherlands-based chemical giant delivered a positive earnings surprise of 3.32%. Its adjusted earnings came in at $2.18 per share for the quarter, topping the Zacks Consensus Estimate of $2.11. Revenues rose roughly 10% year over year to $7,747 million in the quarter, surpassing the Zacks Consensus Estimate of $7,177 million.
LyondellBasell has surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average earnings beat of 2.25%.
Let’s see how things are shaping up for this announcement.
LyondellBasell Industries NV Price and EPS Surprise
LyondellBasell, in its fourth-quarter 2016 earnings call, said that the industry outlook for 2017 has improved over the past several months. LyondellBasell believes that its significant investments in its 2016 maintenance programs have favorably placed it for 2017.
LyondellBasell continues to benefit from the favorable North American natural gas environment. It should also gain from its ethylene and polyethylene expansion moves. The company is executing its expansion projects to leverage the U.S. natural gas liquids (NGLs) advantage.
LyondellBasell, in Jan 2017, completed the 800 million pounds per year ethylene expansion project at its Corpus Christi, TX facility. The project expands ethylene capacity at the site by 50% to 2.5 billion pounds per year from 1.7 billion pounds per year.
The conclusion of the expansion at Corpus Christi marks the completion of LyondellBasell’s multi-year plan to boost annual ethylene capacity in the U.S. by 2 billion pounds and is also another key milestone in the company’s organic profit-generating growth strategy.
LyondellBasell is also advancing plans to build a world-scale plant on the U.S. Gulf Coast for producing propylene oxide (“PO”) and tertiary butyl alcohol (“TBA”), leveraging the shale gas boom in the region. The new PO/TBA facility, considered to be the largest of its kind, will be built in the Houston area. Moreover, the company has decided to build a high density polyethylene (“HDPE”) plant on the U.S. Gulf Coast. The facility, which will have an annual capacity of 1.1 billion pounds (500,000 metric tons), will be the first commercial plant to employ the company’s new proprietary Hyperzone PE technology.
However, LyondellBasell’s operations are subject to interruptions including maintenance outages which is affecting its production capacity and results. Planned maintenance on a co-product processing unit at the Channelview facility is expected to have a $40 million impact on first-quarter 2017 results. Moreover, planned maintenance on the fluid unit at the refinery is expected to impact first-quarter results by roughly $80 million.
LyondellBasell also faces volatility in raw material and energy costs that account for a major portion of its operating costs. The low oil price environment remains a headwind for the company.
LyondellBasell has underperformed the Zacks categorized Chemicals-Diversified industry over a year. The company's shares lost 2.4% during the period while the industry saw a gain of 15.8%.
Earnings Whispers
Our proven model does not conclusively show that LyondellBasell is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP for LyondellBasell is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.33. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: LyondellBasell carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some stocks in the chemicals space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Methanex Corp. (MEOH - Free Report) has an Earnings ESP of +13.04% and carries a Zacks Rank #1.
Air Products and Chemicals, Inc. (APD - Free Report) has an Earnings ESP of +0.73% and carries a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
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LyondellBasell (LYB) Q1 Earnings: What's in the Cards?
LyondellBasell Industries (LYB - Free Report) is set to release its first-quarter 2017 results ahead of the bell on Apr 28.
Last quarter, the Netherlands-based chemical giant delivered a positive earnings surprise of 3.32%. Its adjusted earnings came in at $2.18 per share for the quarter, topping the Zacks Consensus Estimate of $2.11. Revenues rose roughly 10% year over year to $7,747 million in the quarter, surpassing the Zacks Consensus Estimate of $7,177 million.
LyondellBasell has surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average earnings beat of 2.25%.
Let’s see how things are shaping up for this announcement.
LyondellBasell Industries NV Price and EPS Surprise
LyondellBasell Industries NV Price and EPS Surprise | LyondellBasell Industries NV Quote
Factors to Consider
LyondellBasell, in its fourth-quarter 2016 earnings call, said that the industry outlook for 2017 has improved over the past several months. LyondellBasell believes that its significant investments in its 2016 maintenance programs have favorably placed it for 2017.
LyondellBasell continues to benefit from the favorable North American natural gas environment. It should also gain from its ethylene and polyethylene expansion moves. The company is executing its expansion projects to leverage the U.S. natural gas liquids (NGLs) advantage.
LyondellBasell, in Jan 2017, completed the 800 million pounds per year ethylene expansion project at its Corpus Christi, TX facility. The project expands ethylene capacity at the site by 50% to 2.5 billion pounds per year from 1.7 billion pounds per year.
The conclusion of the expansion at Corpus Christi marks the completion of LyondellBasell’s multi-year plan to boost annual ethylene capacity in the U.S. by 2 billion pounds and is also another key milestone in the company’s organic profit-generating growth strategy.
LyondellBasell is also advancing plans to build a world-scale plant on the U.S. Gulf Coast for producing propylene oxide (“PO”) and tertiary butyl alcohol (“TBA”), leveraging the shale gas boom in the region. The new PO/TBA facility, considered to be the largest of its kind, will be built in the Houston area. Moreover, the company has decided to build a high density polyethylene (“HDPE”) plant on the U.S. Gulf Coast. The facility, which will have an annual capacity of 1.1 billion pounds (500,000 metric tons), will be the first commercial plant to employ the company’s new proprietary Hyperzone PE technology.
However, LyondellBasell’s operations are subject to interruptions including maintenance outages which is affecting its production capacity and results. Planned maintenance on a co-product processing unit at the Channelview facility is expected to have a $40 million impact on first-quarter 2017 results. Moreover, planned maintenance on the fluid unit at the refinery is expected to impact first-quarter results by roughly $80 million.
LyondellBasell also faces volatility in raw material and energy costs that account for a major portion of its operating costs. The low oil price environment remains a headwind for the company.
LyondellBasell has underperformed the Zacks categorized Chemicals-Diversified industry over a year. The company's shares lost 2.4% during the period while the industry saw a gain of 15.8%.
Earnings Whispers
Our proven model does not conclusively show that LyondellBasell is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP for LyondellBasell is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.33. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: LyondellBasell carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some stocks in the chemicals space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Chemours Company (CC - Free Report) has an Earnings ESP of +4.08% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Methanex Corp. (MEOH - Free Report) has an Earnings ESP of +13.04% and carries a Zacks Rank #1.
Air Products and Chemicals, Inc. (APD - Free Report) has an Earnings ESP of +0.73% and carries a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>