What worries investors into commodity companies?
Such giants in commodity sector as Exxon Mobil Corp., Freeport-McMoRan Inc. and Archer-Daniels-Midland Co., will most likely report earnings at forecasted level or higher. However, investors are more concerned about what will happen with profit of these corporations till the end of this year.
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Such giants in commodity sector as Exxon Mobil Corp., Freeport-McMoRan Inc. and Archer-Daniels-Midland Co., will most likely report earnings at forecasted level or higher, Bloomberg reports. Some of them benefited from cost cuts and some from growing prices. However, investors are more concerned about what will happen with profit of these corporations till the end of this year. Trade conflicts might restrict global growth, while supply problems in some markets eased. This situation already made Bloomberg Commodity Index close to the largest monthly drop since 2016.
Alcoa Corp. reported earnings last week. It was higher than expected. But then the company disappointed investors by reducing 2018 forecasts due to new US tariffs.
Cargill Inc., one of the largest agricultural companies, showed the best fiscal year since 2011. Operating income grew by 76% in fourth quarter compared with the same period last year. It is expected that ADM will demonstrate the highest earnings growth in year as well. However, shares of agricultural producer suffer from the biggest selloff, as they largely depend on free trade, which is currently under significant threat.
Freeport, largest publicly traded copper producing company in the world, will show its earning on Wednesday. It is expected that earnings per share will be the highest since 2014. However, slowdown in Chinese economy can result in copper demand decline. Despite of that Goldman Sachs still recommends buying company’s stocks.
Revenue forecasts are not very bright for gold producers. Metal price is close to show fourth month of decline.
Energy companies are in more favorable conditions than firms in metal and agricultural sectors due to supply restrictions and growing demand. Corporations included into Energy Select Sector Index, which grew by 13% last quarter, will most likely show 29% increase in revenues. Exxon Mobil and Chevron have to show the best quarterly result since 2014 on Friday. However, even oil is not insured from global war threats. Fuel prices showed decline three weeks in a row.