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Albemarle (ALB) to Report Q3 Earnings: What's in the Offing?

Zacks Equity Research

Albemarle Corporation ALB will release third-quarter 2019 results after the bell on Nov 6. The company is likely to have benefited from strength in its Bromine and Catalysts segments in the quarter. However, headwinds including pricing pressure are likely to reflect on its Lithium unit results.

The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. In this timeframe, it delivered an average positive surprise of around 5.3%.

Albemarle’s shares have lost around 16.4% year to date, compared with the roughly 19% decline recorded by the industry it belongs to.


 

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

Factors to Watch For

Albemarle, last month, announced preliminary results for the third quarter. The company sees earnings for the quarter to be roughly $1.46 per share and adjusted earnings to be $1.53 per share. It expects net income of around $155 million and adjusted EBITDA of roughly $254 million for the third quarter.

Albemarle expects its Lithium unit to post revenues of $330 million in the third quarter, up 22% year over year. Adjusted EBITDA for the business is forecast at $128 million, up 12% year over year.

However, the company noted that sales volumes in Lithium was lower than what it had expected due to Typhoon Tapah in late September that caused a delay in lithium shipments from ports in Shanghai into October. Lower volumes affected third-quarter EBITDA by roughly $15 million.

Moreover, overall lithium pricing was flat to modestly up in the third quarter on a year-over-year basis, per the company. Sustained price pressure on lithium sales in China hurt EBITDA by roughly $5 million. Operating issues in La Negra, Chile also lowered EBITDA by roughly around $10 million in the third quarter. The company also expects to record $7 million non-cash charge related to lithium carbonate inventory in the quarter.

Nevertheless, Albemarle expects strong results from its Bromine and Catalysts units to have more than offset the impact of these factors on its Lithium segment in the third quarter.

Albemarle is benefiting from continued strong demand for flame retardants, especially in electronics. This is likely to have supported volume growth in its Bromine Specialties unit in the third quarter.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for Albemarle for the to-be-reported quarter stands at $899 million, reflecting an expected increase of 15.6% from the year-ago quarter.

The Zacks Consensus Estimate for net sales for the Bromine Specialties segment for the third quarter is pegged at $251 million, reflecting a roughly 7.7% rise on a year over year basis.

Net sales for the Catalysts segment are projected to see a roughly 2.4% year-over-year increase as the Zacks Consensus Estimate for the third quarter is pegged at $257 million.

Zacks Model

Our proven model does not conclusively predict that Albemarle is likely to beat the Zacks Consensus Estimate this quarter. 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 third quarter are both currently pegged at $1.49. 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 #3.  
 

Albemarle Corporation Price and EPS Surprise

 

Albemarle Corporation Price and EPS Surprise

Albemarle Corporation price-eps-surprise | Albemarle Corporation Quote

Stocks That Warrant a Look

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

Kinross Gold Corporation KGC, scheduled to release earnings on Nov 6, has an Earnings ESP of +2.50% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada Corporation FNV scheduled to release earnings on Nov 11, has an Earnings ESP of +0.34% and carries a Zacks Rank #1.

Sealed Air Corporation SEE, scheduled to release earnings on Nov 6, has an Earnings ESP of +2.40% and carries a Zacks Rank #3.

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