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Albemarle (ALB) Up 4.3% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Albemarle Corporation (ALB - Free Report) . Shares have added about 4.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 drivers.
Albemarle’s Earnings and Revenues Beat Estimates in Q1
Albemarle recorded earnings of $51.2 million or $0.45 per share for the first quarter of 2017 compared with $228.2 million or $2.02 a year ago.
The decrease in earnings was attributed to loss on early repayment of debt of $0.34 per share as well as gain on sale of business of $1.02 per share, lower tax rate and income from discontinued operations of $0.15 per share a year ago.
Barring one-time items, the adjusted earnings for the reported quarter were $1.05 per share, topping the Zacks Consensus Estimate of $0.95.
Revenues increased around 17.5% year over year to $722.1 million in the reported quarter. Sales in the quarter rose as favorable impact of higher sales volume in three reportable segments more than offset the impact of divestitures of specialty chemicals business, minerals-based flame retardants and currency exchange. Sales beat the Zacks Consensus Estimate of $678.7 million.
Segment Highlights
Sales from the Lithium and Advanced Materials unit jumped 31.5% year over year to $284.4 million in the reported quarter, supported by favorable pricing, higher sales volumes, partly offset by unfavorable impacts of currency exchange.
The Bromine Specialties segment raked in sales of $219.2 million, up roughly 11.5% year over year, aided by higher sales volumes.
The Refining Solutions unit reported revenues of $185.4 million in the reported quarter, up around 8.7% year over year. Sales were driven by higher sales volumes, partly offset by unfavorable impacts of unfavorable currency, customer and product mix.
Financial Position
Albemarle ended the first quarter with cash and cash equivalents of roughly $1.25 billion, almost five-fold year-over-year increase.
The company repaid roughly $750 million in long-term debt during the quarter and outstanding debt as of Mar 31, 2017 was $1.4 billion.
Cash flow from operations was around $82.6 million for the first quarter, down 52% year over year owing to working capital changes.
Outlook
According to the President, Chairman and CEO, Luke Kissam, the first-quarter results reflect increased growth profile of the company as a result of changes made in the business portfolio over the years. Excluding the impact of divestitures and foreign currency translations, Albemarle’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) and revenues expanded by double digits.
Moving ahead, the company is more optimistic about 2017 based on a strong start in Lithium and Bromine Specialties and favorable outlook for both businesses. Albemarle now sees net sales in the band of $2.9–$3.05 billion (up from $2.8– $2.95 billion expected earlier) and adjusted earnings per share of between $4.20 and $4.40 (up from previous estimate of $4.00–$4.25 per share) for 2017. Adjusted EBITDA for the year is expected to be between $835 million and $875 million, also an increase from $800–$840 million expected earlier.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been seven revisions higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted by 5.6% due to these changes.
At this time, Albemarle's stock has a nice score of 'B' on both grade and momentum front. However, 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 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Albemarle (ALB) Up 4.3% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Albemarle Corporation (ALB - Free Report) . Shares have added about 4.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 drivers.
Albemarle’s Earnings and Revenues Beat Estimates in Q1
Albemarle recorded earnings of $51.2 million or $0.45 per share for the first quarter of 2017 compared with $228.2 million or $2.02 a year ago.
The decrease in earnings was attributed to loss on early repayment of debt of $0.34 per share as well as gain on sale of business of $1.02 per share, lower tax rate and income from discontinued operations of $0.15 per share a year ago.
Barring one-time items, the adjusted earnings for the reported quarter were $1.05 per share, topping the Zacks Consensus Estimate of $0.95.
Revenues increased around 17.5% year over year to $722.1 million in the reported quarter. Sales in the quarter rose as favorable impact of higher sales volume in three reportable segments more than offset the impact of divestitures of specialty chemicals business, minerals-based flame retardants and currency exchange. Sales beat the Zacks Consensus Estimate of $678.7 million.
Segment Highlights
Sales from the Lithium and Advanced Materials unit jumped 31.5% year over year to $284.4 million in the reported quarter, supported by favorable pricing, higher sales volumes, partly offset by unfavorable impacts of currency exchange.
The Bromine Specialties segment raked in sales of $219.2 million, up roughly 11.5% year over year, aided by higher sales volumes.
The Refining Solutions unit reported revenues of $185.4 million in the reported quarter, up around 8.7% year over year. Sales were driven by higher sales volumes, partly offset by unfavorable impacts of unfavorable currency, customer and product mix.
Financial Position
Albemarle ended the first quarter with cash and cash equivalents of roughly $1.25 billion, almost five-fold year-over-year increase.
The company repaid roughly $750 million in long-term debt during the quarter and outstanding debt as of Mar 31, 2017 was $1.4 billion.
Cash flow from operations was around $82.6 million for the first quarter, down 52% year over year owing to working capital changes.
Outlook
According to the President, Chairman and CEO, Luke Kissam, the first-quarter results reflect increased growth profile of the company as a result of changes made in the business portfolio over the years. Excluding the impact of divestitures and foreign currency translations, Albemarle’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) and revenues expanded by double digits.
Moving ahead, the company is more optimistic about 2017 based on a strong start in Lithium and Bromine Specialties and favorable outlook for both businesses. Albemarle now sees net sales in the band of $2.9–$3.05 billion (up from $2.8– $2.95 billion expected earlier) and adjusted earnings per share of between $4.20 and $4.40 (up from previous estimate of $4.00–$4.25 per share) for 2017. Adjusted EBITDA for the year is expected to be between $835 million and $875 million, also an increase from $800–$840 million expected earlier.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been seven revisions higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted by 5.6% due to these changes.
Albemarle Corporation Price and Consensus
Albemarle Corporation Price and Consensus | Albemarle Corporation Quote
VGM Scores
At this time, Albemarle's stock has a nice score of 'B' on both grade and momentum front. However, 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 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.