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Element Solutions (ESI) Updates 2020 Financial Guidance

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Zacks Equity Research
·3 min read
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Element Solutions Inc. ESI recently announced an increase in its 2020 financial guidance. The company noted that its electronics and automotive-oriented businesses continue to perform well. In the recent quarter, demand from new product launches in the mobile market, a resilient macroeconomic environment and overall strong execution have led to good results in November.

The company increased its fourth-quarter 2020 adjusted EBITDA guidance to roughly $118 million from $90-$95 million. This will translate to expected adjusted EBITDA for 2020 to roughly $415 million. Year-over-year growth in full year adjusted earnings per share is expected to be mid-to-high single digit. Free cash flow is projected to grow greater than $240 million and expected year-end net debt to adjusted EBITDA ratio is around 3.0x.

Element Solutions’ resilience in business, ability to protect margins and capital allocation to improve earnings conversion contribute to compound per share value despite the challenges in 2020. The two key factors driving results are the highly variable cost model and secular growth dynamics of the company, Element Solutions noted.

Shares of Element Solutions have surged 40.3% in the past year compared with the 9.2% rise of  industry.

Element Solutions believes that it has ample growth opportunities based on megatrends driving its markets and its ability to outperform markets through sound strategic execution. Contributions from acquisitions are expected to drive sales. The company is also benefiting from its cost-containment measures.

Element Solutions Inc Price and Consensus

 

Element Solutions Inc Price and Consensus
Element Solutions Inc Price and Consensus

Element Solutions Inc price-consensus-chart | Element Solutions Inc Quote

 

Zacks Rank & Other Key Picks

Element Solutions currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks worth considering in the basic materials space are Bunge Limited BG, Silvercorp Metals Inc. SVM, and BHP Group BHP.

Bunge has a projected earnings growth rate of 43% for the current year. The company’s shares have gained around 18% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Silvercorp has an expected earnings growth rate of 40% for the current year. The company’s shares are up around 6.8% in the past year. It currently carries a Zacks Rank #2.

BHP has an expected earnings growth rate of around 32.4% for the current year. The company’s shares have gained around 16.9% in the past year. It currently carries a Zacks Rank #2.

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