Why is Chemours (CC) down 2.1% since its last earnings report?

A month has passed since Chemours (CC) last reported earnings. Shares lost about 2.1% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Chemours due for a breakout? 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 better understand the important catalysts.

Chemours earnings soared, revenues exceeded Q1 estimates

Chemours reported earnings of $52 million, or 34 cents per share, in the first quarter of 2024, compared with earnings for the year-ago quarter of $145 million, or 96 cents.

Excluding one-time items, earnings were 32 cents per share. It beat the Zacks Consensus Estimate of 25 cents.

In the first quarter, the company reported net sales of $1,350 million, down approximately 12% year-over-year. This was below the Zacks Consensus Estimate of $1,360.3 million. This decline was primarily due to a 23% decline in the Advanced Materials segment, a 7% decline in the Titanium Technologies segment and an 8% decline in the Thermal and Specialty Solutions segment. Volumes fell 6% this quarter while prices fell 5%.

The most important information in the segment

The Titanium Technologies division reported revenue of $588 million in the quarter, down 7% from the prior year. This result was below our estimate of USD 592.5 million. The downside was a 7% price drop, with relatively stable volume and exchange rates.

The Thermal and Specialty Solutions segment saw revenue decline 8% year over year, reaching $449 million in the reported quarter. This amount was lower than our estimate of USD 458.1 million. The defect was attributed to a 6% drop in volume and a 2% drop in price.

Revenue for the Advanced Performance Materials unit was $299 million, down 23% year-over-year. It exceeded our estimate of $290 million. The decline was mainly due to an 18% drop in volumes and a 5% drop in prices.

Financial

Chemours ended the quarter with cash and cash equivalents of $746 million, down approximately 9% year-over-year. Long-term debt amounted to USD 3,968 million, an increase of approximately 10% year-on-year.

During the reported quarter, cash used in operating activities was $290 million.

Perspectives

Going forward, the company expects Titanium Technologies to achieve sequential net sales growth of approximately 15% in the second quarter of 2024, reflecting previously communicated improvement in its TiO2 order book. Adjusted EBITDA growth is projected to be consistent with net sales growth. Higher volumes and improved fixed cost absorption are expected to be partially offset by the rescheduling of more expensive ore consumption, most of which is expected in the second quarter.

The story continues

In the second quarter, Chemours expects sequential consolidated net sales growth of approximately 15%. Consolidated adjusted EBITDA is expected to increase by approximately 15% on a sequential basis.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

As a result of these changes, the consensus estimate moved by -22.32%.

VGM results

Chemours currently has an average growth score of C, which indicates the same momentum score. Following exactly the same trajectory, the stock is rated C for Value, ranking in the middle 20% for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. It’s no surprise that Chemours carries a Zacks Rank #5 (Strong Sell). We expect a below-average rate of return on stocks in the coming months.

Industry player performance

Chemours is part of the Zacks Chemical – Diversified industry. Another stock in the same industry, Olin (OLN), has gained 0.4% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

Olin reported revenue of $1.64 billion in its most recently reported quarter, representing a year-over-year change of -11.3%. EPS of $0.40 for the same period compared to $1.16 a year ago.

For the current quarter, Olin is expected to report earnings per share of $0.72, representing a change of -36.3% from the prior-year quarter. The Zacks Consensus Estimate has remained unchanged over the past 30 days.

Olin carries a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Rating of C.

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