AgroFresh Solutions (AGFS) Reports Third Quarter Losses, Skip Revenue Estimates

AgroFresh Solutions (AGFS) came out with a quarterly loss of $0.01 per share versus the Zacks Consensus Estimate of a loss of $0.04. For comparison, a year earlier the loss was $0.10 per share. These numbers have been adjusted for one-off items.

This quarterly report presented an earnings surprise of 75%. A quarter ago, it was expected that this specialty chemicals company would post a loss of $0.41 per share when it actually produced a loss of $0.47, delivering a surprise of -14.63%.

The company has topped consensus EPS estimates three times over the last four quarters.

AgroFresh, which belongs to the Zacks Chemical – Specialty industry, posted revenues of $47.76 million for the quarter ended September 2022, missing the Zacks Consensus Estimate by 11.70%. For comparison, revenues from a year ago amounted to $49.18 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.

Year-to-date, AgroFresh shares are up approximately 40.7% compared to the S&P 500’s decline of -19.7%.

What’s next for AgroFresh?

Although AgroFresh has outperformed the market this year, the question that arises for investors is: what’s next for the stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of the earnings release, the estimate revision trend for AgroFresh is mixed. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) stock. Therefore, the company’s stock is expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is of breakeven on $59.15 million in revenue for the coming quarter and -$0.69 on $178.87 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Chemicals – Specialty is currently in the bottom 17% of 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another company in the same industry, Ventator Materials (VNTR), has not yet released results for the quarter ending September 2022. The results are expected to be released on November 14.

The chemical company is expected to report a quarterly loss of $0.06 per share in its upcoming report, representing a year-over-year change of -300%. The consensus EPS estimate for the quarter has been revised 88.9% down to the current level over the last 30 days.

Ventator Materials’ revenue is expected to be $547.74 million, down 1.7% from the year-ago quarter.

Want the latest recommendations from Zacks Investment Research? Today you can download the top 7 stocks for the next 30 days. Click to get this free report

AgroFresh Solutions, Inc. (AGFS): Free Stock Analysis Report

Venator Materials PLC (VNTR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research