Why Is Kronos Worldwide (KRO) Up 5.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Kronos Worldwide (KRO). Shares have added about 5.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kronos Worldwide due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kronos Worldwide’s Earnings & Sales Miss Estimates in Q2
Kronos Worldwide reported second-quarter 2024 earnings of 17 cents per share against a loss of 7 cents per share incurred in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of 21 cents.
Net sales increased around 12.9% year over year to $500.5 million due to higher sales volumes as a result of stronger demand for TiO2 in major markets, which was somewhat offset by lower average TiO2 selling prices. The top line, however, missed the Zacks Consensus Estimate of $504.2 million.
Volumes and Pricing
TiO2 production volumes (thousand metric tons) were up 53.9% year over year to 137 in the second quarter. TiO2 sales volumes (thousand metric tons) rose 28.8% to 134 in the quarter.
TiO2 segment profit was $41.1 million in the reported quarter against a segment loss of $2.3 million a year ago. The upside is driven primarily by improved operating income as a result of increased sales and production volumes and lower production costs, offset by lower average TiO2 selling prices.
Financials
Kronos ended the quarter with cash and cash equivalents of $133.8 million, down roughly 22% year over year. Long-term debt declined 6% to $423.7 million.
Outlook
Kronos predicts that demand will continue to improve in 2024. Sales volumes for the year are expected to be higher than in 2023. The company has boosted production rates in response to present and predicted near-term enhanced demand. It expects production rates for the balance of 2024 to remain higher than a year ago. The company has undertaken TiO2 selling price hikes, which need to be sustained in order to attain margins in-line with historical levels.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -6.8% due to these changes.
VGM Scores
Currently, Kronos Worldwide has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 this revision indicates a downward shift. Notably, Kronos Worldwide has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Kronos Worldwide belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, Eastman Chemical (EMN), has gained 2.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Eastman Chemical reported revenues of $2.36 billion in the last reported quarter, representing a year-over-year change of +1.7%. EPS of $2.15 for the same period compares with $1.99 a year ago.
Eastman Chemical is expected to post earnings of $2.12 per share for the current quarter, representing a year-over-year change of +44.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Eastman Chemical. Also, the stock has a VGM Score of B.
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