Yahoo Finance Albemarle (ALB) Up 0.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Albemarle (ALB). Shares have added about 0.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Albemarle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Albemarle’s Q3 Earnings Surpass Estimates, Revenues Lag
Albemarle logged a profit of $897.2 million or $7.61 per share in the third quarter of 2022 compared with a loss of $392.8 million or $3.36 per share a year ago.
Adjusted earnings in the reported quarter were $7.50 per share, topping the Zacks Consensus Estimate of $6.84.
Revenues climbed roughly 152% year over year to $2,091.8 million in the quarter, However, it trailed the Zacks Consensus Estimate of $2,118 million. The top line was driven by higher pricing on the back of strong demand from diverse end markets.
Segment Highlights
Sales from the Lithium unit surged 318% year over year to $1,501.1 million. Sales were driven by higher pricing (up 298% net of currency) associated with renegotiated contracts and higher market pricing. Volumes rose 20% in the quarter on the back of the La Negra III/IV expansion in Chile and increased tolling volumes to meet rising customer demand.
The Bromine Specialties segment recorded sales of $354.9 million, up 28% year over year. Sales were supported by an 18% (net of currency) rise in pricing and 10% higher volume. Tight market conditions led to strong demand and favorable pricing.
The Catalysts unit recorded revenues of $235.8 million in the reported quarter, up 22% year over year. Volumes rose 17% while pricing increased 5% (net of currency).
Financial Position
Albemarle ended the quarter with cash and cash equivalents of roughly $1,382.8 million, up around 132% year over year. Long-term debt was $3,118.8 million, up around 54% year over year.
Cash flow from operations was $955.6 million for the nine months ended Sep 30, 2022, up around 95% year over year.
Outlook
Albemarle tightened its net sales guidance for 2022 to the band of $7.1-$7.4 billion. It sees strength in lithium pricing and end markets to offset modestly lower expectations due to bromine-related softness in major end markets, including consumer and industrial electronics and building & construction. Adjusted EBITDA for the year is now forecast to be $3.3-$3.5 billion.
Albemarle also sees adjusted earnings per share for 2022 in the band of $19.75-$21.75, compared with $19.25-$22.25 it expected earlier.
The company anticipates capital expenditures of $1.3-1.4 billion for 2022. Net cash from operations is projected to be $1.45-$1.65 billion. The company also expects to be free cash flow positive in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -12.41% due to these changes.
VGM Scores
Currently, Albemarle has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Albemarle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Albemarle belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, Chemours (CC), has gained 12.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Chemours reported revenues of $1.78 billion in the last reported quarter, representing a year-over-year change of +5.8%. EPS of $1.24 for the same period compares with $1.27 a year ago.
For the current quarter, Chemours is expected to post earnings of $0.36 per share, indicating a change of -55.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -25.7% over the last 30 days.
Chemours has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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