Ternium to Report Q2 Earnings: What's in the Cards for the Stock?

TX’s shares have gained 53.7% in a year, underperforming the Zacks Steel Producers industry’s 79.1% rise.

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Let’s see how things are shaping up for this announcement.

What Our Model Unveils for TX Stock

Our proven model predicts an earnings beat for Ternium this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Earnings ESP for TX is +21.40%. The Zacks Consensus Estimate for the second quarter is currently pegged at $1.29. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: TX currently carries a Zacks Rank #3.

What do TX’s Revenue Estimates Indicate?

The Zacks Consensus Estimate for TX’s second-quarter consolidated sales is currently pegged at $4,365.1 million, calling for an increase of 10.6% from the year-ago quarter’s tally.

The consensus estimate for total steel segment net sales is pegged at $4,225 million, indicating a 10.8% year-over-year increase.

Factors at Play for TX Stock

Ternium is expected to have benefited from healthy demand for steel products and higher steel prices across key markets in the second quarter, leading to improved margins. Its shipments in Mexico are likely to have been aided by a recovery in demand in the commercial market following last year’s destocking. Infrastructure projects are expected to have contributed to demand, supporting shipments. 

Steel demand in Brazil remains largely stable. Demand in automotive remains strong in that country, while trade measures taken by the government have led to improved fundamentals, aiding steel consumption and shipments. Weakness in construction and soft consumption in certain markets, including home appliances, are likely to continue to have impacted the company’s business in Argentina in the quarter to be reported. 

The company is also expected to have benefited from the cost competitiveness of its facilities and actions to boost liquidity and strengthen its financial position. However, TX is likely to have faced continued headwinds from raw material cost inflation and higher purchased slab costs. It is seeing higher costs for raw materials, including iron ore.

Basic Materials Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider, as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Avient Corporation AVNT, scheduled to release earnings on Aug. 6, has an Earnings ESP of +0.87% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for AVNT’s earnings for the second quarter is currently pegged at 89 cents.

The Chemours Company CC, scheduled to release earnings on Aug. 4, has an Earnings ESP of +27.17%.

The Zacks Consensus Estimate for CC's earnings for the second quarter is currently pegged at 43 cents. CC currently sports a Zacks Rank #2. 

Materion Corporation MTRN, slated to release earnings on Aug. 5, has an Earnings ESP of +5.39% and carries a Zacks Rank #2 at present.

The consensus mark for MTRN’s second-quarter earnings is currently pegged at $1.55.

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This article originally published on Zacks Investment Research (zacks.com).

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