Yahoo Finance Element Solutions (ESI) Rallies 15% in 6 Months: Here's Why
Element Solutions Inc.’s ESI shares have appreciated 15.2% in the past six months. The company also outperformed the industry’s decline of 20.7% and topped the S&P 500’s 14.5% rise over the same period.
Image Source: Zacks Investment Research
Let’s take a look at the factors driving the stock’s price appreciation.
What’s Driving Element Solutions?
ESI, earlier this month, raised its guidance for the second quarter and full-year 2024. The company anticipates an adjusted EBITDA of approximately $135 million for the second quarter, up from the previously expected $125 million. This optimistic outlook is driven by strong performance in its electronics business, with notable improvements and accelerated profitability in certain areas. Growth in the wafer-level packaging and circuitry segments supported significant customer expansion in the past two months. While some segments of the electronics market show signs of recovery, overall unit and chemistry volumes remain below long-term trends.
Despite this, Element Solutions expects to achieve record adjusted EBITDA in 2024, the highest since its inception in 2019, bolstering confidence in its long-term growth potential. The company increased its 2024 adjusted EBITDA forecast from a range of $515-$530 million to a revised range of $530-$545 million. The company also projects 2024 adjusted earnings per share (EPS) between $1.40 and $1.46.
In first-quarter 2024, Element Solutions reported an adjusted EPS of 34 cents, surpassing the Zacks Consensus Estimate of 32 cents. The company achieved net sales of $575 million, which remained flat year over year and fell short of the Zacks Consensus Estimate of $601.8 million. Organic net sales inched up 1%, while adjusted EBITDA grew by 13% yearly to $127 million.
During the first quarter, the company experienced a recovery in electronics markets. Investments in high-value technologies resulted in a favorable product mix, and continued pricing actions amid declining raw materials prices led to higher margins in the industrial business. Net sales in the Electronics segment increased by 3% year over year to $349 million, with organic net sales rising 4% from the previous year’s levels.
Element Solutions has a trailing four-quarter average earnings surprise of 3%. The Zacks Consensus Estimate for 2024 EPS is pegged at $1.41, indicating a 9.3% increase from the previous year’s levels.
Element Solutions Inc. Price and Consensus
Element Solutions Inc. price-consensus-chart | Element Solutions Inc. Quote
Zacks Rank & Key Picks
ESI currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, ATI Inc. ATI, and Ecolab Inc. ECL. Carpenter Technology sports a Zacks Rank #1 (Strong Buy), and ATI and Ecolab carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CRS’s current-year earnings is pegged at $4.31, indicating a year-over-year rise of 278%. CRS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 15.1%. The company’s shares have soared 96.3% in the past year.
ATI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 8.34%, on average. The stock has rallied 35.3% in the past year.
The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.59, indicating a rise of 26.5% from the year-ago levels. ECL beat the consensus estimate in each of the last four quarters, the average earnings surprise being 1.3%. The stock has rallied nearly 32.9% in the past year.
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