Kronos Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Kronos Worldwide (NYSE: KRO  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

As a specialty chemical maker, Kronos is highly sensitive to the price of a single specialized pigment. Will the recovery in the housing market help boost demand for the company's products? Let's take an early look at what's been happening with Kronos over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Kronos

 

 

Analyst EPS Estimate

($0.05)

Year-Ago EPS

$0.74

Revenue Estimate

$397.8 million

Change From Year-Ago Revenue

(9.1%)

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Kronos look more colorful this quarter?
Analysts have gotten more pessimistic about Kronos in recent months, worsening their consensus loss estimate for the just-ended quarter by $0.03 per share and lopping nearly $0.30 per share off their 2013 full-year projections. Still, investors haven't been that dour in their views, with the stock having risen more than 10% since early December.

Kronos is one of a select group of chemical companies that make titanium dioxide, a pigment used in paint and other coatings. DuPont (NYSE: DD  ) is the leader in world TiO2 production, but Kronos is among the top producers as well.

But times have been tough lately for Kronos, as high prices for TiO2 have sapped demand. Sherwin-Williams (NYSE: SHW  ) and other paint manufacturers put off purchases and started developing alternatives to TiO2 to try to boost their profits and, as a result, both Kronos and rival Huntsman (NYSE: HUN  ) said last year that margins would see pressure from falling TiO2 prices.

The question for Kronos going forward is whether a recovery in housing will boost paint demand and therefore improve the TiO2 pricing situation. Many companies in housing-related industries have already seen impressive gains due to the rebound, and Kronos could definitely benefit from better conditions in its key market.

In its quarterly results, watch for Kronos to discuss whether its February price increase has started to reverse the troubling trend of weak TiO2 pricing. With the company having raised its prices for titanium dioxide products by about $200 to $250 per metric ton, Kronos could see at least some of its profits restored in future quarters.

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