The Lubrizol Corporation (LZ) announced a very solid first-quarter performance in late April, and now the specialty chemical company is about 2 weeks away from its second-quarter report, scheduled for Jul 29.
Earnings estimates have been trending slowly but surely higher over the past 2 months, but another solid report will likely provide a sharp boost to expectations – just as it did last time.
More recently, the company announced share repurchases of up to 7.2 million late last month, or about 10% of LZ’s common shares outstanding. The company plans on completing the buyback within 1.5 years to 2 years. As of that announcement, LZ had repurchased 1.575 million shares for $125.5 million, or an average price of about $80 per share.
For more about this, read Lubrizol Authorizes Repurchase.
But when it comes to the Zacks #1 Rank Top Performers List, we’re most interested with what’s happening today. Shares of the company are up more than 2% Monday, which is a very respectable performance since the market spent most of the session loitering around breakeven. Volume surged late in the day and ended higher by more than 1 million shares, which is above the daily average of 757,000.
LZ is one of five companies from the chemicals-specialty industry on today’s Zacks #1 Rank List. The other 4 names are Ferro Corporation (FOE), Innospec Inc. (IOSP), OMNOVA Solutions Inc. (OMN) and TPC Group Inc. (TPCG).
Earnings Estimates for The Lubrizol Corporation
For the soon-to-be-announced second quarter, nine total estimates have combined for a Zacks Consensus Estimate of $2.36 per share. That is up 22 cents, or 10.3%, in the past 3 months.
As for this year, the Zacks Consensus Estimate of $8.71 per share has been inching higher for several weeks now. For example, that outlook is up 6 cents over the last 60 days, but that accounts for less than 1%. Nevertheless, the guidance is up 9% from 3 months ago in reaction to its solid quarterly report.
The Zacks Consensus Estimate for next year is $8.94 per share, or about 2.6% higher than this year. This outlook is up nearly 9% as well over the past 3 months.
First-Quarter Report
Well, Lubrizol had just about everything you’d want in a report when announcing its first-quarter results. The company enjoyed a substantial positive earnings surprise, double-digit revenue growth and even raised its outlook for the full year. And just for a little icing on the cake, LZ also raised its dividend by 16%.
Earnings per share, excluding items, reached $2.33, which more than doubled last year’s $1.06 thanks to higher shipment volumes, sustained margins and improved utilization of production facilities.
The result also bettered the Zacks Consensus Estimate of $1.93 by nearly 21%. As this graph shows, the company spent much of 2009 at breakeven before finally belting out 2 consecutive quarters with double-digit surprises:
Consolidated revenues reached $1.32 billion, or 30% better than last year’s $1.01 billion, due to 28% higher volume and a 2% favorable currency impact.
The catalyst for the above-mentioned increase in earnings estimates over the past three months came from the enhanced 2010 guidance of adjusted EPS between $8.40 and $8.80, excluding items. Although all product lines and geographic markets experienced higher volumes, the company doesn’t expect a full recovery to its 2008 volume level until next year.
Lubrizol continues to shoot for 2012 earnings of $10 per share.
About Lubrizol
The Lubrizol Corporation is a global technology company concentrating on high-performance chemicals, systems and services for industry and transportation. The company develops, produces and sells specialty additive packages and related equipment used in transportation and industrial finished lubricants. The company groups its product lines into two operating segments: chemicals for transportation and chemicals for industry.
