W.R. Grace & Co. Earnings Cheat Sheet: Margins Expand with Strong Revenues, Profit Increases

W.R. Grace & Co. (NYSE:GRA) reported net income above Wall Street’s expectations for the third quarter. W.R. Grace & Company is engaged in the production and sale of specialty chemicals and specialty materials on a global basis through its two operating segments, Grace Davison and Grace Construction Products.

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W.R. Grace Earnings Cheat Sheet for the Third Quarter

Results: Net income for the specialty chemicals company rose to $81.3 million ($1.07 per share) vs. $54.9 million (74 cents per share) in the same quarter a year earlier. This marks a rise of 48.1% from the year earlier quarter.

Revenue: Rose 26.7% to $864.2 million from the year earlier quarter.

Actual vs. Wall St. Expectations: GRA reported adjusted net income of $1.16 per share. By that measure, the company beat the mean estimate of $1.06 per share.

Quoting Management: “I am pleased with our performance this quarter. Our earnings growth reflects the high value of our products and the success of our business teams in responding to changing customer requirements and changes in our operating environment,” said Fred Festa, Grace’s Chairman, President and Chief Executive Officer. “We are focused on finishing 2011 strong and are well positioned for the challenges of 2012.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 22 cents in the second quarter, by 24 cents in the first quarter, and by one cent in the fourth quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 20.6% to $826.4 million in the second quarter. The figure rose 13.1% in the first quarter from the year earlier and climbed 2.2% in the fourth quarter of the last fiscal year from the year-ago quarter.

Net income has increased 22.7% year over year on average across the last five quarters. The biggest gain came in the second, when income climbed 48.6% from the year earlier quarter.

Gross margins grew 0.5 percentage point to 36.5%. The growth seemed to be driven by increased revenue, as the figure rose 26.7% from the year earlier quarter while costs rose 25.7%.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the fourth quarter is 92 cents per share, up from 83 cents ninety days ago. For the fiscal year, the average estimate has moved up from $3.56 a share to $3.87 over the last ninety days.

Competitors to Watch: The Dow Chemical Company (NYSE:DOW), Innospec Inc. (NASDAQ:IOSP), Albemarle Corporation (NYSE:ALB), Rockwood Holdings, Inc. (NYSE:ROC), Sigma-Aldrich Corporation (NASDAQ:SIAL), Celanese Corporation (NYSE:CE), BASF SE (BASFY), Ferro Corporation (NYSE:FOE), Huntsman Corporation (NYSE:HUN), and Lubrizol Corporation (NYSE:LZ).

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(Source: Xignite Financials)