Quaker Chemical Earnings Preview

Investors are on the edge of their collective seats, hoping that Quaker Chemical (NYSE: KWR  ) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings on Monday, Feb. 27. Quaker Chemical is a global provider of process chemicals, chemical specialties, services, and technical expertise to a range of industries, including steel, automotive, mining, aerospace, tube and pipe, coatings, and construction materials.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back Quaker Chemical, with three of four rating it a buy and the remainder rating it a hold. That rating hasn't budged in three months as analysts have remained unchanged in their opinion of the stock.
  • Revenue forecasts: On average, analysts predict $173.8 million in revenue this quarter. That would represent a rise of 22.3% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.79 per share. Estimates range from $0.75 to $0.80.

What our community says:
CAPS All-Stars are in strong support of the stock, with 100% awarding it an "outperform" rating. Most of the community backs the All-Stars, with 97.1% granting it a rating of "outperform." Quaker Chemical has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Quaker Chemical's profit has risen year over year by an average of 29.4% over the past five quarters. Revenue has now gone up for three straight quarters. The company's gross margin shrank by three percentage points in the last quarter. Revenue rose 32.4% while cost of sales rose 38.6% to $122.8 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. Quaker Chemical has seen slipping gross margin year over year for the last four quarters. Gross margin reflects the total sales revenue retained after costs. Here are Quaker Chemical's reported margins for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

32.6%

32.0%

33.0%

33.7%

Operating Margin

9.6%

8.9%

8.8%

8.2%

Net Margin

7.3%

5.9%

6.6%

4.9%

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Earnings estimates provided by Zacks.

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