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Why LyondellBasell Industries Stock Fell 17.6% in January

By Keith Noonan - Feb 10, 2020 at 2:24PM

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An earnings miss and sliding oil prices weighed on the chemicals stock last month.

What happened

Shares of LyondellBasell (LYB -1.37%) slumped 17.6% in January, according to data from S&P Global Market Intelligence. The stock trended downward due to weakness in the oil market and then saw sell-offs following the publication of the company's fourth-quarter report at the end of the month. 

LYB Chart

LYB data by YCharts

LyondellBasell published fourth-quarter earnings results on Jan. 31 and delivered sales and earnings for the period that came in below the market's expectations. The company recorded non-GAAP (adjusted) earnings per share of $1.91 on revenue of roughly $8.179 billion, while the average analyst targets as polled by Zacks called for adjusted earnings per share of $2.26 and sales of $8.427 billion. 

The word 'Oil" next to an arrow pointing down.

Image source: Getty Images.

So what

Sliding oil prices put pressure on LyondellBasell stock throughout January, and concerns about the economic impact of the 2019-nCoV coronavirus dimmed the outlook for the company's refining segment. Crude oil prices declined 15% in January, marking the biggest drop in the month since 1991, according to a report published by Julianne Geiger at Oilprice.com. Combined with the fourth-quarter earnings miss at the end of the month, the bearish oil market created conditions that pushed LyondellBasell stock down double digits.

Now what

LyondellBasell stock has regained some ground February, with shares up roughly 5% in the month's trading so far.

LYB Chart

LYB data by YCharts

The company expects that 2020 results for its olefins and polyolefins Americas segment will benefit from additional capacity from the business' Hyperzone polyethylene plant. Management also expects to make substantial progress on the construction of its propylene oxide and tertiary butyl alcohol plant, which it expects will be completed in 2021 and help drive growth for its intermediates and derivatives segment.

LyondellBasell trades at roughly eight times this year's expected earnings and 0.8 times expected sales. Shares have a dividend yield of roughly 5.1% at current prices.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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LyondellBasell Industries N.V. Stock Quote
LyondellBasell Industries N.V.
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