Methanex (MEOH) Up 6.8% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Methanex's recent earnings report shows a mixed performance with increased profits but declining revenues, raising questions about future trends leading up to the next earnings release [1][2]. Financial Performance - The second-quarter profit attributable to shareholders was $64 million or 93 cents per share, an increase from $35 million or 52 cents per share in the same quarter last year [2]. - Adjusted earnings per share were 97 cents, exceeding the Zacks Consensus Estimate of 42 cents [2]. - Revenues fell approximately 13.4% year over year to $797 million, missing the Zacks Consensus Estimate of $873.9 million [3]. - Adjusted EBITDA rose around 11.6% year over year to $183 million [3]. Operational Highlights - Production totaled 1,621,000 tons, up 14% year over year, with increased output from Geismar and Trinidad, offset by reduced production from Egypt, Canada, Chile, and New Zealand [4]. - Total sales volume in the first quarter was 2,133,000 tons, down 18.3% year over year, missing the estimate of 2,387,000 tons [5]. - The average realized price for methanol was $374 per ton, up from $352 per ton in the prior-year quarter, exceeding the estimate of $362 per ton [5]. Financial Position - Cash and cash equivalents were $485 million at the end of the quarter, with cash flow from operating activities at $277 million [6]. - The company returned $12.5 million to shareholders through dividends in the reported quarter [6]. Future Outlook - Methanex expects its 2025 production to be approximately 8 million tons, subject to fluctuations due to gas availability and maintenance [7]. - The company anticipates higher adjusted EBITDA in the third quarter of 2025 compared to the second quarter, driven by increased sales volume, although the average realized price is expected to decrease to between $335 and $345 per ton [8]. Market Sentiment - Estimates for Methanex have trended downward over the past month, with a Zacks Rank of 3 (Hold), indicating an expectation of in-line returns in the coming months [9][11]. - Methanex has a strong Growth Score of A but lags in Momentum with a C, while maintaining an overall VGM Score of A, placing it in the top quintile for value investors [10]. Industry Comparison - Methanex is part of the Zacks Chemical - Diversified industry, where competitor Olin has gained 20.7% over the past month, reporting revenues of $1.76 billion with a year-over-year change of +7% [12]. - Olin's expected earnings for the current quarter are $0.15 per share, reflecting a year-over-year change of +171.4% [13].