For Immediate Release
Chicago, IL – May 25, 2022 – Zacks Equity Research shares Albemarle Corp. (
ALB Quick Quote ALB - Free Report) as the Bull of the Day and Camping World Holdings, Inc. ( CWH Quick Quote CWH - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Toll Brothers ( TOL Quick Quote TOL - Free Report) and Nordstrom ( JWN Quick Quote JWN - Free Report) .
Here is a synopsis of all four stocks:
Albemarle Corp. is one of the rare companies that is raising its earnings outlook for 2022. This Zacks Rank #1 (Strong Buy) is a leader in the red-hot lithium market.
Albemarle is a global specialty chemicals company with customers in 100 countries. It has a leading position in lithium, bromine and refining catalysts.
Raised Full Year Guidance
On May 23, Albemarle raised its full year guidance just 3 weeks after it released first quarter earnings on May 4, based on completion of additional lithium contract renegotiations.
Lithium is used in EV batteries, fueling strong demand.
"Over the past 12 months, we've made significant progress in renegotiating more variable-priced contracts with our lithium customers. Implementation of these contracts is a key driver of the expected year-over-year improvement in our financial results," said Albemarle CEO Kent Masters.
"We now expect full-year 2022 adjusted EBITDA to be up more than 160% from prior year based on favorable market dynamics for our Lithium and Bromine businesses. Both businesses are critical for transitioning to greener energy and advancing electrification and digitalization," he added.
Albemarle revised its sales guidance up to a range of $5.8 billion to $6.2 billion from $5.2 billion to $5.6 billion.
Earnings are now expected in the range of $12.30 to $15.00, up from the prior guidance of $9.25 to $12.25.
According to a presentation given at the Jefferies Renewable Energy Conference on May 24, Lithium makes up about 45% of net sales, Bromine 34% and Catalysts 21%.
Focused on Growth
While Albemarle has rewarded shareholders by raising its dividend 28 consecutive years, it's focus in 2022 is on growth.
It expects to spend $1.3 billion to $1.5 billion on 2022E CAPEX.
Shares are Cheap in 2022
Analysts still haven't upgraded their estimates on the company's recent revisions. But you can see from the price and consensus chart that earnings are expected to soar this year and next.
Yet shares are up just 4% on the year, although they've gained 21% in the last month after posting solid earnings.
Albemarle has a PEG ratio of just 0.9. A PEG ratio under 1.0 indicates that a company has both growth and value.
Its dividend is currently yielding 0.7%.
In these uncertain times, Albemarle is one company that is bullish about 2022. It should be a stock on your short list.
[Tracey currently owns ALB in her Zacks Insider Trader portfolio. She has no position in her personal portfolio.] Camping World Holdings, Inc. had a record quarterly report but analysts are bearish due to the macro headwinds. This Zacks Rank #5 (Strong Sell) is expected to see earnings decline by the double digits in 2022.
Camping World is America's largest retailer of RVs and related products and serves. It owns two brands, Camping World and Good Sam. It has a network of RV dealerships, service centers and customer support centers.
Camping World has over 185 locations in 42 states.
A Record Quarter but a Miss in Q1
On May 3, Camping World reported its first quarter results and missed on the Zacks Consensus by $0.14. Earnings were $1.15 versus the consensus of $1.29.
Yet it was a record quarter for revenue, up 6.7% to $1.7 billion.
Gross margin also rose 29 basis points to 33.7%.
New and used vehicle inventories rose to $1.8 billion, an increase of $938.3 million. The increase was driven by strategic growth of the used vehicle business, an additional 14 locations, and the easing of new vehicle supply chain constraints in their core categories which was experienced for much of the prior year.
It was this increase in inventory that has some of the analysts worried.
Analysts Cut Estimates
Even with record revenue, the analysts are bearish due to the macro headwinds. On the conference call for the quarterly report, Camping World noted slowing of sales with the start of the Ukraine War. Additionally, new RV inventory is rising quickly.
5 estimates were cut for 2022 in the last 30 days pushing the Zacks Consensus Estimate down to $4.91 from $5.83 during that time.
That's an earnings decline of 28.6% from 2021 when Camping World made $6.88.
Shares Tumble in 2022
Camping World shares have taken a tumble in 2022, losing 36% year-to-date.
They're cheap, with a forward P/E of 5.3. But the earnings estimates are also turning down for both 2022 and 2023 which makes them a value trap.
Camping World pays a dividend, currently yielding 9.6%.
But investors might want to wait on the sidelines until the earnings outlook turns around and the macro uncertainty stabilizes.
Additional content: Mixed Markets Tuesday on Lower New Home Sales; Nordstrom Beats & Raises
Yesterday, we discussed whether the markets were being subjected to the "whipsaw" again, with the Dow sinking more than -500 points at session lows and the Nasdaq was -4%. Well, the whipsaw came, but — on the Dow, at least — it went away by the session close: the Dow was +0.15% at the bell, the S&P 500 was -0.80%. The Nasdaq rebounded but still came in -270 points or -2.35%, and the small-cap Russell 2000 was -1.35%.
One of the metrics we've been paying close attention to last week and this is in home sales, and today's
New Home Sales for April came out much lower than expected: 591K from the downwardly revised 709K (March had originally reported 763K, so this is a big drop). This amounts to a -16.6% month over month slide, sending inventories leaping to 9-month supply levels. Year over year, New Home Prices are -26.9%.
While this is not a good development for home developers —
Toll Brothers, for instance, was down -4.4% Tuesday — it does infer downward pressure on asking prices, which is a good development for bringing down inflation levels overall. The median price for a newly built home jumped +20% from a year ago to $450,600. This compares with last week's Existing Home Sales median price of $391,200, +15% year over year. We'll start looking for these figures to reverse over the next few monthly prints. PMI Manufacturing and Services for May both came in lower month over month, but nothing earth-crushing: +57.5 on Manufacturing is down from the 59.2 reported in April; Services reached 53.5, notably lower than the 55.6 from a month ago. Yet all these data points are well north of 50, which demarcates growth from contraction. Some roll-off here may also be construed as somewhat good news as well — on the goods-producing side, at least, as it would indicate higher inventories may draw down.
We've also talked at length about difficulties in the Retail space during this Q1 earnings season, but one company that looks to have put together a splendid plan is
Nordstrom, which posted positive surprises on both top and bottom lines after yesterday's closing bell: -$0.06 per share was 2 cents better than the Zacks consensus, and a big improvement from the year-ago's Covid-ravaged quarter of -64 cents per share; sales came in at $3.57 billion — easily surpassing the $3.33 billion analysts were expecting and representing +19% growth on the top line year over year.
Nordstrom also upped its guidance range for full-year earnings to $3.20-3.50 per share; the Zacks consensus had been for $3.30. The company cited higher pricing power and lower markdown rates in the quarter, and the words "supply chain productivity" sound like music to a retail investor's ears. Improvements are moving toward pre-pandemic levels for Nordstrom. Late trading had sent shares +19% on the news, but have come back a bit since for the Zacks Rank #2 (Buy)-rated stock.
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