It's been a good week for Albemarle Corporation (NYSE:ALB) shareholders, because the company has just released its latest annual results, and the shares gained 7.3% to US$94.31. It was not a great result overall. While revenues of US$3.6b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 16% to hit US$5.02 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the 15 analysts covering Albemarle provided consensus estimates of US$3.48b revenue in 2020, which would reflect a measurable 3.0% decline on its sales over the past 12 months. Statutory per share are forecast to be US$5.00, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$3.53b and earnings per share (EPS) of US$5.13 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$83.70, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Albemarle, with the most bullish analyst valuing it at US$120 and the most bearish at US$50.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
In addition, we can look to Albemarle's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that sales are expected to reverse, with the forecast 3.0% revenue decline a notable change from historical growth of 7.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 3.8% annually for the foreseeable future. It's pretty clear that Albemarle's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$83.70, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Albemarle going out to 2023, and you can see them free on our platform here.
You can also see whether Albemarle is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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