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Element Solutions (ESI) Stock Up 31% in 3 Months: Here's Why
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Element Solutions Inc.'s (ESI - Free Report) shares have shot up 31.1% over the past three months. The rally has resulted in the stock outperforming its industry’s rise of 2.4% over the same time frame. The company has also topped the S&P 500’s 7.2% rise over the same period.
Let’s take a look into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.
What’s Going in ESI’s Favor?
Solid first-quarter results and upbeat outlook have contributed to the run-up in the company’s shares. The company’s adjusted earnings of 37 cents for the first quarter topped the Zacks Consensus Estimate of 32 cents. Net sales rose around 22% year over year to $550.1 million.
The company also announced an increase in its guidance for 2021. It raised its adjusted earnings guidance to at least $1.30, up from the prior view of $1.10-1.15. It also now expects adjusted EBITDA in the band of $500-$510 million. Moreover, it anticipates generating free cash flow of $285 million for 2021, up from $275 million expected earlier.
Element Solutions is benefiting from a recovery in its end markets from the coronavirus-induced slowdown. It is seeing healthy demand in its high-end electronics business. The company saw strong demand in the broader electronics supply chain and accelerated demand across the industrial economy in the first quarter.
Moreover, the company is implementing a number of cost-containment measures including reduction of traveling costs. These actions are likely to support its margins.
Element Solutions should also benefit from the acquisitions of Kester and DMP Corporation. The Kester acquisition has added capabilities and scale to its existing electronics assembly materials business. Moreover, the DMP buyout has expanded Element Solutions’ investment in technology to offer innovative solutions. The recent acquisition of H.K. Wentworth Limited will also reinforce the company’s electronics portfolio.
Earnings estimates for Element Solutions have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased 14.3%. The consensus estimate for 2022 has also been revised 15.6% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Celanese Corporation (CE - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .
Nucor has a projected earnings growth rate of 229.3% for the current year. The company’s shares have rallied around 159% 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.
Celanese has an expected earnings growth rate of around 68.3% for the current year. The company’s shares have shot up roughly 92% in the past year. It currently sports a Zacks Rank #1.
Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 160% in the past year. It currently carries a Zacks Rank #2.
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The only question is “Will you get into the right stocks early when their growth potential is greatest?”
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Element Solutions (ESI) Stock Up 31% in 3 Months: Here's Why
Element Solutions Inc.'s (ESI - Free Report) shares have shot up 31.1% over the past three months. The rally has resulted in the stock outperforming its industry’s rise of 2.4% over the same time frame. The company has also topped the S&P 500’s 7.2% rise over the same period.
Let’s take a look into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.
What’s Going in ESI’s Favor?
Solid first-quarter results and upbeat outlook have contributed to the run-up in the company’s shares. The company’s adjusted earnings of 37 cents for the first quarter topped the Zacks Consensus Estimate of 32 cents. Net sales rose around 22% year over year to $550.1 million.
The company also announced an increase in its guidance for 2021. It raised its adjusted earnings guidance to at least $1.30, up from the prior view of $1.10-1.15. It also now expects adjusted EBITDA in the band of $500-$510 million. Moreover, it anticipates generating free cash flow of $285 million for 2021, up from $275 million expected earlier.
Element Solutions is benefiting from a recovery in its end markets from the coronavirus-induced slowdown. It is seeing healthy demand in its high-end electronics business. The company saw strong demand in the broader electronics supply chain and accelerated demand across the industrial economy in the first quarter.
Moreover, the company is implementing a number of cost-containment measures including reduction of traveling costs. These actions are likely to support its margins.
Element Solutions should also benefit from the acquisitions of Kester and DMP Corporation. The Kester acquisition has added capabilities and scale to its existing electronics assembly materials business. Moreover, the DMP buyout has expanded Element Solutions’ investment in technology to offer innovative solutions. The recent acquisition of H.K. Wentworth Limited will also reinforce the company’s electronics portfolio.
Earnings estimates for Element Solutions have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased 14.3%. The consensus estimate for 2022 has also been revised 15.6% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Element Solutions Inc. Price and Consensus
Element Solutions Inc. price-consensus-chart | Element Solutions Inc. Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Celanese Corporation (CE - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .
Nucor has a projected earnings growth rate of 229.3% for the current year. The company’s shares have rallied around 159% 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.
Celanese has an expected earnings growth rate of around 68.3% for the current year. The company’s shares have shot up roughly 92% in the past year. It currently sports a Zacks Rank #1.
Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 160% in the past year. It currently carries a Zacks Rank #2.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
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