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Why Is Methanex (MEOH) Down 2.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Methanex (MEOH). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Methanex due for a breakout? 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 drivers.

Methanex's Earnings and Sales Surpass Estimates in Q4

Methanex logged fourth-quarter 2023 adjusted earnings of 52 cents per share compared with 73 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 28 cents.

Revenues declined around 6.5% year over year to $922 million in the quarter. However, the top line beat the Zacks Consensus Estimate of $901.2 million.

Adjusted EBITDA in the reported quarter fell 7.5% year over year to $148 million.

Operational Highlights

Production in the quarter totaled 1,779,000 tons, up around 16.6% year over year. The figure was above our estimate of 1,705,000 tons. Total sales volume in the fourth quarter was 2,862,000 tons, higher than the prior-year quarter’s figure of 2,647,000 tons. The figure surpassed our estimate of 2,581,000 tons.

The average realized price for methanol was $322 per ton, down from $373 in the prior-year quarter. The figure was below our estimate of $347 per ton.

FY2023 Results

Full-year 2023 earnings were $2.57 per share, down from $4.86 in the previous year. Net sales fell around 13.6% year over year to $3,723 million.

Financials

In 2023, the company returned $136 million to shareholders via regular dividends and share repurchases. The company finished the year with $458 million in cash.

Outlook

The company projects that with the start of Geismar 3, production in 2024 will surpass 2023’s figure by roughly 8.1 million tons. The 2024 production projection is based on the midpoint of Chile and New Zealand guidance, with G3 ramping up through February, Egypt restarting in the first half of February and all other plants operating at full capacity. Quarterly production may vary depending on turnaround timing, gas supply, unforeseen outages and unanticipated events.



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How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Methanex has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Methanex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Methanex is part of the Zacks Chemical - Diversified industry. Over the past month, Dow Inc. (DOW), a stock from the same industry, has gained 4.4%. The company reported its results for the quarter ended December 2023 more than a month ago.

Dow Inc. reported revenues of $10.62 billion in the last reported quarter, representing a year-over-year change of -10.4%. EPS of $0.43 for the same period compares with $0.46 a year ago.

For the current quarter, Dow Inc. is expected to post earnings of $0.47 per share, indicating a change of -19% from the year-ago quarter. The Zacks Consensus Estimate has changed -4.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Dow Inc. Also, the stock has a VGM Score of B.

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