Strength Seen in Tronox (TROX): Can Its 7.6% Jump Turn into More Strength?

Personal Finance

Tronox (TROX) shares ended the last trading session 7.6% higher at $13.88. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock’s 9.7% loss over the past four weeks.

TROX’s rally appears to be driven by the optimism over improved demand for titanium dioxide. The company is expected to benefit from improved pigment volumes as customers have largely completed de-stocking. Zircon volumes are also expected to rise on demand recovery.

This producer of titanium ore and titanium dioxide is expected to post quarterly loss of $0.05 per share in its upcoming report, which represents a year-over-year change of +70.6%. Revenues are expected to be $666.31 million, up 2.7% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Tronox, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock’s price usually doesn’t keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on TROX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

Tronox is a member of the Zacks Chemical – Diversified industry. One other stock in the same industry, Stepan Co. (SCL), finished the last trading session 0.2% lower at $92.81. SCL has returned -2.9% over the past month.

For Stepan Co., the consensus EPS estimate for the upcoming report has changed -0.9% over the past month to $0.38. This represents a change of -35.6% from what the company reported a year ago. Stepan Co. currently has a Zacks Rank of #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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