Methanex (MEOH): Sustaining Momentum or Facing a Correction?

Methanex (MEOH) has emerged as a focal point in the methanol sector, with its Q2 2025 earnings report and production trends sparking debates about its ability to sustain momentum or face a correction. This analysis examines the company’s financial performance, operational dynamics, and market outlook to assess its trajectory.

Earnings Performance: A Mixed Bag of Strength and Weakness

Methanex’s Q2 2025 results revealed a net income of $64 million, a 93% year-over-year increase in earnings per share (EPS) to $0.93, and adjusted EBITDA of $183 million, up 11.6% from the prior year [1]. These figures exceeded the Zacks Consensus Estimate of $0.42 per share, signaling resilience amid a 13.4% year-over-year revenue decline to $797 million [1]. Historically, MEOH has shown a 57% win rate and an average 0.86% return over 30 days following earnings beats since 2022, though the effect lacks statistical significance.

However, the revenue shortfall and a Zacks Rank #3 (Hold) rating highlight underlying challenges. The G3 project, a cornerstone of Methanex’s growth strategy, incurred $13 million in delay costs, which impacted adjusted EBITDA [4]. Despite these hurdles, the company ended the quarter with $485 million in cash and maintained a 2.1% dividend yield, suggesting financial prudence [2].

Production Trends: Regional Disparities and Strategic Turnarounds

Production in Q2 2025 totaled 1.62 million tonnes, driven by increased output from Geismar and Trinidad. Yet, lower production in Chile, New Zealand, and Egypt, coupled with a planned turnaround at Medicine Hat, offset gains [2]. The G3 project’s first methanol production in Q2 2024 marked a pivotal step toward full capacity, but operational bottlenecks remain [4].

The company’s production strategy reflects a balancing act: leveraging high-performing facilities while managing maintenance cycles and regional volatility. This duality underscores Methanex’s reliance on geographic diversification to mitigate risks, though execution gaps could test its long-term efficiency.

Market Outlook: Growth Potential vs. Near-Term Headwinds

The global methanol market is projected to grow at a 3.67% CAGR from 2025 to 2030, driven by petrochemical demand in China and the U.S., as well as green methanol adoption in the marine sector [1]. Analysts have upgraded Methanex to “Outperform” with a $50 price target, reflecting optimism about its role in low-carbon fuel transitions [3]. The stock’s 6.8% post-earnings rally, outpacing the S&P 500, further indicates investor confidence [1].

Yet, momentum metrics tell a different story. Methanex holds a Momentum Grade of D and a relative price strength rank of 24, suggesting weak near-term traction [5]. Analysts also caution about feedstock price volatility and certification hurdles for green methanol, which could delay market penetration [1]. While the “Moderate Buy” consensus and $44.88 average price target imply upside potential, the 17% EPS miss in FY 2024 and flat FY 2024 revenue underscore the need for caution [2].

Conclusion: A Calculated Bet on Methanol’s Future

Methanex’s Q2 2025 results highlight a company navigating a complex landscape of growth opportunities and operational challenges. Its earnings beat and strategic investments in green methanol position it to capitalize on long-term demand trends, particularly in decarbonization-driven sectors. However, near-term revenue declines, production bottlenecks, and mixed momentum indicators suggest a correction could materialize if execution falters.

For investors, the key lies in balancing Methanex’s structural advantages—such as its geographic footprint and dividend yield—with the risks of market volatility and certification delays. While the stock’s 25.84% forecasted upside is enticing, prudence dictates monitoring the G3 project’s progress and the pace of green methanol adoption. In a sector poised for transformation, Methanex’s ability to adapt will determine whether it sustains momentum or faces a recalibration.

Source:
[1] Methanex Reports Second Quarter 2025 Results,
https://www.globenewswire.com/news-release/2025/07/30/3124538/0/en/Methanex-Reports-Second-Quarter-2025-Results.html
[2] Methanex Full Year 2024 Earnings: Misses Expectations,
https://finance.yahoo.com/news/methanex-full-2024-earnings-misses-121405332.html
[3] Methanex Co. (TSE:MX) Receives Average Rating of "Buy",
https://www.marketbeat.com/instant-alerts/methanex-co-tsemx-given-average-recommendation-of-buy-by-brokerages-2025-08-27/
[4] Methanex Q2 2024 Earnings Report,
https://www.marketbeat.com/earnings/reports/2024-7-30-methanex-co-stock/
[5] Is Methanex Corporation(MEOH) Building Momentum?,
https://www.aaii.com/investingideas/article/311327-is-methanex-corporationmeoh-building-momentum