Income candidate LyondellBasell Industries NV (NYSE: LYB – $106.67) reported revenue of $9.77 billion in the first quarter compared with $8.43 billion a year earlier. The analyst consensus was $9.43 billion. Adjusted earnings for the giant chemical and oil refining company was $1.2 billion, a 54% increase relative to the first quarter of last year and equal to $3.11 per share as compared to analysts’ estimates of $2.75 and last year’s $2.26. The company reported strong operating income in its Olefins & Polyolefins – Americas unit, but less so for O&P – Europe Asia International, which saw a decline in earnings. The Intermediates & Derivatives segment operating income totaled $408 million compared to $269 million, last year. Refining swung from a loss in the first quarter of 2017 to a profit of $15 million and the small Technology segment reported a minor decline from a year ago.
Positions are not for the faint of heart. However, LYB is showing strong earnings and cash flow quality and operating efficiencies along with a solid balance sheet, thus its current valuation suggests a relatively low amount of downside risk. Full year earnings may reach $10.73 providing a forward price earnings ratio of 10. Also, with the impending A. Schulman acquisition, the company can achieve new avenues of growth and enhance the stocks longer-term prospects. The well-covered $3.60 annual dividend, yielding 3.75%, provides some support, as well.