Shares of Chemours (CC 0.90%), a specialty chemical company, fell sharply at the open of trading on Friday, losing as much as 14.5% of their value in the first few minutes of trading. The big story was the company's earnings release, which hit the market after the close on Thursday. It wasn't all that bad, but it clearly wasn't good enough for investors.
Chemours reported fourth-quarter 2021 revenue of $1.6 billion, up 18% from the same quarter in 2020. Consensus estimates had been calling for the top line to come in at around $1.5 billion. For the full year, sales increased 28% to $6.3 billion.
Over both periods, Chemours said the recovery in global demand from the effects of the pandemic supported its sales increases. So far, the story seems pretty good, noting the top-line estimate beat.
The problem arises when you get to the bottom line. Adjusted earnings per share in the fourth quarter of 2021 were $0.81, up around 33% from the year-ago period, when the company earned $0.61 per share. That's not bad, but Wall Street analysts were looking for $0.87 per share. That's a sizable miss, and investors don't like it when companies miss analyst estimates.
So the downbeat view on Wall Street isn't exactly shocking, noting that -- even after today's drop -- the shares have more than doubled from their pandemic lows. Basically, it looks like a lot of good news had already been priced in here.
To be fair, however, there are other moving parts in the picture. For example, sales in Chemours' titanium division (accounting for 55% of fourth-quarter sales) slowed down in the quarter because of issues in the auto sector. Although demand elsewhere and price increases were able to offset the automotive headwind, the problems in that key market seem likely to linger. Investors are probably worried about that, exacerbating the negative sentiment.
Overall, it appears that Chemours has staged a solid rebound from the pandemic-driven demand issues it faced. That's not a bad thing, even if it didn't live up to investor expectations on the bottom line. There are still issues to face, notably including the troubles in the auto sector and inflation, but it would be difficult to call this quarter bad.