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Element Solutions Raises Financial View on Market Strength

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Element Solutions Inc ESI recently provided an updated financial guidance and free cash flow view.

The company stated that the recovery across its end markets mostly affected by the coronavirus pandemic has accelerated. In its high-end electronics business, it is witnessing consistent robust demand. Also, the better-than-expected momentum in the automotive industry as well as continued resilience in the electronics market is expected to continue.

Per management, the overall benefits of this market strengthening have been boosted by its execution of commercial and cost initiatives. As such, the company increased its third-quarter adjusted EBITDA view to at least $95 million compared with its prior estimate of $80 million.

Further, the company expects its key end-markets to remain comparatively healthy in the fourth quarter on the basis of current trends. It expects adjusted EBITDA in the second half of 2020 to be more than $185 million. The company has also raised its free cash flow outlook for 2020 to $200 million from $185 million.

Shares of Element Solutions have moved up 9.3% in the past year against the industry’s 8.9% decline.

Element Solutions is likely to gain from strategic initiatives, including controlling operating expenses and certain supply-chain management initiatives. Cost savings and cost-containment actions are expected to support its margins and act as a tailwind.

Zacks Rank & Key Picks

Element Solutions currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Eldorado Gold Corporation EGO, Kirkland Lake Gold Ltd. KL and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Eldorado Gold has an expected earnings growth rate of 2,325% for 2020. The company’s shares have surged 39.7% in the past year.

Kirkland Lake Gold has an expected earnings growth rate of 22.6% for 2020. Its shares have returned 23.2% in the past year.

Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 60.1% in the past year.

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Element Solutions Inc (ESI) : Free Stock Analysis Report
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