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Albemarle (ALB) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research
·4-min read

Albemarle Corporation ALB will release fourth-quarter 2019 results after the bell on Feb 19. The impact of pricing pressure is likely to reflect on its Lithium segment results. However, the company is likely to have benefited from healthy demand in its Bromine Specialties segment in the quarter.

The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. In this timeframe, it delivered a positive surprise of around 4.8%, on an average.

Albemarle’s shares are up 9.3% over a year, compared with the 24.9% decline of the industry it belongs to.


 

Let’s see how things are shaping up for this announcement.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for Albemarle for the to-be-reported quarter stands at $1,001 million, reflecting an expected increase of 8.6% from the year-ago quarter.

The Zacks Consensus Estimate for net sales for the Lithium unit stands at $424 million, indicating an around 24% year-over-year increase. The same for the Bromine Specialties segment for the fourth quarter is pegged at $254 million, reflecting a roughly 6.3% rise on a year over year basis.

Moreover, the Zacks Consensus Estimate for net sales for the Catalysts segment is pegged at $297 million, indicating a 2.6% year-over-year decline.

Some Factors to Watch For

Albemarle is gaining from continued strong demand for flame retardants, especially in electronics. Demand in the oilfield market also remains healthy. This is likely to have supported volume growth in its Bromine Specialties unit in the fourth quarter. However, delays in the start-up of new fluid catalytic cracking (FCC) units are likely to have hurt volumes in the Catalysts segment.

Moreover, Albemarle is seeing pricing pressure for both lithium carbonate and hydroxide in specific markets, especially in China. Lithium prices remain under pressure amid oversupply of the white metal in the market. According to the company, lithium supply capacity grew faster than demand last year, leading to oversupply in the market. This has caused a sharp decline in lithium prices.

Global lithium pricing weakness is expected to have continued in the fourth quarter. As such, the impact of lower prices is expected to get reflected on Lithium segment’s margins in the quarter to be reported.

Albemarle is also exposed to currency headwinds. Unfavorable currency swings, stemming from a stronger dollar, impacted its sales by $7.6 million in the last reported quarter. Currency headwind is likely to have impacted its fourth-quarter results as well.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Albemarle this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Albemarle is 0.00%. The Most Accurate Estimate and the Zacks Consensus Estimate for the fourth quarter are both currently pegged at $1.75. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: Albemarle carries a Zacks Rank #4.  

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Valmont Industries, Inc. VMI, scheduled to release earnings on Feb 19, has an Earnings ESP of +2.93% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake Chemical Corporation WLK, slated to release earnings on Feb 18, has an Earnings ESP of +4.08% and carries a Zacks Rank #3.

AK Steel Holding Corporation AKS, scheduled to release earnings on Feb 20, has an Earnings ESP of +11.11% and carries a Zacks Rank #3.

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Westlake Chemical Corporation (WLK) : Free Stock Analysis Report
 
AK Steel Holding Corporation (AKS) : Free Stock Analysis Report
 
Valmont Industries, Inc. (VMI) : Free Stock Analysis Report
 
Albemarle Corporation (ALB) : Free Stock Analysis Report
 
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Zacks Investment Research