Ferro's (FOE) Earnings And Revenues Trail Estimates In Q4

Ferro Corporation (NYSE:FOE) slipped to a loss (attributable to the company) from continuing operations of $2.2 million or 3 cents per share for fourth-quarter 2019, from a profit of $11.4 million or 14 cents a year ago.

Barring one-time items, earnings were 17 cents per share for the quarter, falling well short of the Zacks Consensus Estimate of 28 cents.

The company recorded revenues of $245.9 million for the quarter, down around 8% year over year. Sales also missed the Zacks Consensus Estimate of $356.8 million. The company saw lower sales across its segments in the quarter.

Ferro Corporation Price, Consensus and EPS Surprise

Ferro Corporation Price, Consensus and EPS Surprise

Ferro Corporation price-consensus-eps-surprise-chart | Ferro Corporation Quote

Segment Highlights

Sales from the Performance Colors and Glass division were $160.4 million in the quarter, down roughly 5% year over year. Gross profit for the unit fell modestly to $47.9 million.

Sales from the Color Solutions unit dropped around 13% year over year to $85.5 million. Gross profit declined around 11% year over year $27.7 million.

Full-Year Results

Earnings (as reported) from continuing operations for 2019 were 41 cents per share, down from 66 cents per share a year ago. Adjusted earnings were 83 cents per share, down around 27% year over year.

Revenues were $1,018.4 million for the full year, down around 6% year over year. The company’s results in 2019 were hurt by challenging conditions across certain markets and geographic regions.

Financials

Ferro ended 2019 with cash and cash equivalents of $96.2 million, flat year over year. Long-term debt was $798.9 million, down roughly 1% year over year.

Outlook

The company expects net sales to be flat to up 2% on a year-over-year basis in 2020. It also sees adjusted EBITDA in the band of $160-$170 million for the year. Moreover, the company expects adjusted earnings of 82-92 cents per share for 2020.

Ferro in the reported quarter agreed to divest its Tile Coating Systems business. The transaction, which is slated to complete in the second half of 2020, is expected to deliver net proceeds of around $430-$440 million. The company expects to mainly use the net proceeds to pay down debt. The divestment will allow it to have a portfolio of businesses more focused in specialty materials and more targeted to higher growth end-use markets.

Price Performance

Ferro’s shares are down 41.3% over a year, compared with the 6% decline recorded by its industry.

Zacks Rank & Stocks to Consider

Ferro currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Daqo New Energy Corp. (NYSE:DQ) , NovaGold Resources Inc. (NYSE:NG) and Commercial Metals Company (NYSE:CMC) .

Daqo New Energy has projected earnings growth rate of 353.7% for 2020 and sports a Zacks Rank #1 (Strong Buy). The company’s shares have rallied roughly 74% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

NovaGold has projected earnings growth rate of 11.1% for the current fiscal and carries a Zacks Rank #2 (Buy). The company’s shares have surged around 117% over a year.

Commercial Metals has estimated earnings growth rate of 21.6% for the current fiscal and carries a Zacks Rank #2. The company’s shares are up roughly 9% in a year’s time.

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