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Why Is Albemarle (ALB) Up 10% Since Last Earnings Report?

·4 min read

A month has gone by since the last earnings report for Albemarle (ALB). Shares have added about 10% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Albemarle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Albemarle’s Earnings and Revenues Top Estimates in Q1

Albemarle recorded a profit of $95.7 million or 84 cents per share in the first quarter of 2021, down from $107.2 million or $1.01 per share it earned a year ago.

Adjusted earnings for the reported quarter were $1.10 per share, up from $1.00 a year ago. It topped the Zacks Consensus Estimate of 79 cents.

Revenues rose 12% year over year to $829.3 million in the quarter. It surpassed the Zacks Consensus Estimate of $754 million. The company witnessed higher sales across all of its core segments. It also benefited from cost-savings initiatives.

Segment Highlights

Sales from the Lithium unit rose around 18% year over year to $279 million in the reported quarter, aided by higher volumes that more than offset lower carbonate and technical grade pricing. Adjusted EBITDA was up roughly 35% year over year to $106.4 million, aided by higher sales.

The Bromine Specialties segment recorded sales of $280.4 million, up around 21% year over year. Sales were supported by higher demand for products across the portfolio and a favorable customer mix. Adjusted EBITDA was $94.6 million, up around 14% year over year. The company’s cost-savings initiatives and pricing offset higher raw materials costs.

The Catalysts unit recorded revenues of $220.2 million in the reported quarter, up around 6% year over year, supported by higher volumes. Adjusted EBITDA was $25.4 million, down roughly 46% year over year. The decline was due to cost impact from the winter storm in the U.S. Gulf Coast and lower prices, partly masked by cost-savings actions. The company saw higher hydroprocessing catalysts volumes due to timing of shipments. This was offset by reduced volumes for fluid catalytic cracking due to the impact of the winter storm.

Financial Position

Albemarle ended the quarter with cash and cash equivalents of roughly $569.9 million, up around 3% year over year. Long-term debt was $2,030 million, down around 35% year over year.

Cash flow from operations was $157.9 million for the quarter, up around 2% year over year.

Outlook

Moving ahead, Albemarle expects its performance for full-year 2021 to improve modestly on a year-over-year basis on a sustained recovery in global economic activities.

The company continues to expect net sales for 2021 between $3.2 billion and $3.3 billion. Moreover, adjusted EBITDA for the year has been forecast in the range of $810-$860 million. Albemarle also continue to see adjusted earnings per share in the band of $3.25 to $3.65 for 2021.


 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 5.06% due to these changes.

VGM Scores

Currently, Albemarle has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Albemarle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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