Element Solutions (ESI) Down 4.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Element Solutions (ESI). Shares have lost about 4.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Element Solutions due for a breakout? 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.
Element Solutions’ Q2 Earnings In Line With Estimates, Revenues Lag
Element Solutions recorded second-quarter 2023 earnings of 11 cents per share compared with 25 cents in the year-ago quarter.
Adjusted earnings per share came in at 31 cents in the quarter, which matched the Zacks Consensus Estimate.
The company generated net sales of $586.1 million, down 13% year over year. The figure also missed the Zacks Consensus Estimate of $626.9 million. The company faced headwinds from the weakening of the electronics market in the quarter.
Segment Highlights
Net sales in the Electronics segment fell 19% year over year to $356 million in the reported quarter, with organic net sales down 9% from the previous year's reported figure. The figure fell short of our estimate of $362.7 million.
In the Industrial & Specialty segment, net sales declined 2% year over year to $230 million, with organic net sales also down 2%. The figure was below our estimate of $256.2 million.
Financial Position
Element Solutions ended the quarter with cash and cash equivalents of $282.4 million, up 30.7% year over year. Long-term debt was $2,029.4 million at the end of the quarter, up 7.4% year over year.
Cash from operating activities was $81 million in the quarter. Free cash flow was $67 million.
Outlook
The company expects adjusted EBITDA for third-quarter 2023 of roughly $125 million. Element Solutions revised its adjusted EBITDA guidance to the range of $490 million to $500 million for 2023.
It estimates full-year 2023 adjusted earnings per share of around $1.30. The company anticipates generating a free cash flow of roughly $265 million for 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -7.76% due to these changes.
VGM Scores
At this time, Element Solutions has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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, Element Solutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Element Solutions Inc. (ESI) : Free Stock Analysis Report
