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Orion Engineered Carbons Q3 Earnings: Can NYSE:OEC Hit Its $0.27 EPS Target?

in EARNINGS/INVESTING IDEAS by

Orion Engineered Carbons S.A. (NYSE:OEC) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.27/share on revenue of $299.9 million. The consensus earnings per share (EPS) of $0.27/share is based on a poll of 7 analysts and represents a decline in eps of −48.5% over the same quarter last year, when the company reported earnings of $0.52/share.

The revenue forecast of $299.9 million based on a poll of 4 analysts implies a year-over-year (YoY) decline in revenue of −19.0%. Last year the company reported $370.2 million in revenue for the quarter.

Expected to report EPS contraction of −48.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $299.94 $370.19 −19.0%
EPS $0.27 $0.52 −48.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 1 quarter.

What are your expectations from Orion Engineered Carbons S.A. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.26 -$0.14 46.1% Beat
Q1, 2020 $0.36 $0.44 21.2% Beat
Q4, 2019 $0.39 $0.42 7.8% Beat
Q3, 2019 $0.47 $0.52 11.6% Beat
Q2, 2019 $0.50 $0.53 6.3% Beat
Q1, 2019 $0.48 $0.40 −16.9% Missed
Q4, 2018 $0.47 $0.48 2.3% Beat
Q3, 2018 $0.51 $0.51 0% Met

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 9.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $10.53 $11.52 9.4% Increase
May 7, 2020 $8.21 $8.61 4.9% Increase
February 20, 2020 $16.50 $17.64 6.9% Increase
October 31, 2019 $16.81 $18.30 8.9% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.77, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.77 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Orion Engineered Carbons S.A. is currently trading at $14.67/share, up 0.2% for the day. The company is trading at approximately 70.6% of its 52-week high of $20.78/share. The company’s stock price is up 27.3% since the last earnings report and down −4.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 47.70 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:OEC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 20.41 and a forward P/E multiple of 19.27.

Orion Engineered Carbons S.A.’s current share price also implies a price-to-book (P/B) multiple of 5.88. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $14.67
P/E Ratio 20.4x
P/E Ratio (Fwd) 19.3x
PEG Ratio −0.4
Total Debt / Total Capital 47.2%
Levered Free Cash Flow $63.601 million
EV / EBITDA 8.4x

Finbox

Orion Engineered Carbons S.A. is a small-cap stock with a market capitalization of $887.3 million and a total enterprise value of $1.528 billion. The company operates in the Materials sector and the Chemicals industry.

Orion Engineered Carbons S.A., together with its subsidiaries, produces and sells carbon black products in Germany, the United States, South Korea, Brazil, China, South Africa, the rest of Europe, and internationally. It operates through two segments, Specialty Carbon Black and Rubber Carbon Black. The company offers post-treated specialty carbon black grades for coatings and printing applications; high purity carbon black grades for the fiber industry; and various conductive carbon black grades for use in polymer and printing applications, as well as in silicon, non-woven textile, building material, battery electrodes metallurgical, agrochemical, and carbon brush applications. It also provides rubber carbon black products for applications in mechanical rubber goods under the PUREX brand, as well as in tires under the ECORAX brand name. The company was formerly known as Orion Engineered Carbons S.à r.l. and changed its name to Orion Engineered Carbons S.A. in July 2014. Orion Engineered Carbons S.A. was incorporated in 2011 and is headquartered in Houston, Texas.

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