What happened
Shares of The Chemours Company (CC 7.41%) jumped over 13% today after the company reported third-quarter 2019 operating results. The engineered materials manufacturer reported solid results despite a difficult global environment for its main product, titanium dioxide. In fact, the business topped Wall Street expectations for revenue ($1.39 billion actual vs. $1.37 billion expected) and met the consensus estimate for adjusted earnings per share (EPS) of $0.59.
The ability to meet expectations in the face of global trade tensions and a slowing global economy -- both of which place heavy burdens on commodity-driven businesses such as Chemours -- has the stock sitting comfortably higher than the three-year lows set just months ago. Investors may not want to label it a value stock just yet, however.
As of 1:18 p.m. EST, the stock had settled to a 10.2% gain.
Image source: Getty Images.
So what
While investors are happy with the third-quarter performance, it's all relative. The business is still contracting compared to last year, as prices and demand for titanium dioxide have fallen. Revenue in the first nine months of 2019 stood at $4.17 billion, down from $5.17 billion in the year-ago period. Income before taxes fell 67% in the comparison period.
Knowing that the worst macroeconomic headwinds are still to come, Chemours is moving quickly to improve operating efficiency and maintain an acceptable level of profitability in the face of mounting challenges. The company decided to shut down its methylamines and methylamides business (read: commodity products) and is reviewing ways to potentially restructure its remaining portfolios.
Additionally, and perhaps more important for investors with a long-term mindset, Chemours is eager to stabilize its titanium dioxide segment and bolster its controversial fluoroproducts business. Those efforts include being a responsible steward of global supply for titanium dioxide, and capturing more value from the specific applications enabled by its fluoropolymers.
Now what
The latest quarterly results indicate that Chemours is doing its best to navigate a number of macroeconomic headwinds, especially those related to international trade. But investors can't overlook the risks posed by uncertainty in trade, the inevitable slowdown of the cyclical and commodity-driven titanium dioxide industry, or the potential legal fallout from the company's fluoroproducts business.
