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Element Solutions (ESI) Down 1.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Element Solutions (ESI - Free Report) . Shares have lost about 1.7% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Element Solutions due for a breakout? 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 catalysts.
Element Solutions Tops Q1 Earnings and Revenues Estimates
Element Solutions recorded earnings (as reported) of 23 cents per share in first-quarter 2022 compared with 33 cents in the year-ago quarter.
Adjusted earnings per share came in at 38 cents in the quarter, which beat the Zacks Consensus Estimate of 35 cents.
The company generated net sales of $680.2 million, up around 24% year over year. The figure beat the Zacks Consensus Estimate of $644 million. Organic net sales rose 7%. The company benefited from strong demand across many of its major end-markets in the quarter amid challenges from increased macroeconomic uncertainty and cost inflation.
Segment Highlights
Net sales in the Electronics segment rose 21% year over year to $427 million in the reported quarter. Organic net sales were up 8% from the year-ago quarter’s reported figure.
Net sales in the Industrial & Specialty unit rose 29% year over year to $253 million. Organic net sales moved up 4% year over year.
Financial Position
Element Solutions ended the quarter with cash and cash equivalents of $218.8 million, down around 31% year over year. Long-term debt was $1,892.1 million at the end of the quarter, up roughly 26% year over year.
Net cash used in operating activities were $5.6 million for the quarter compared with net cash flows from operating activities of $32.6 million a year ago.
Outlook
The company raised the bottom-end of its guidance for adjusted EBITDA for 2022 to a range of $580-$590 million. It also reaffirmed its full-year adjusted earnings per share outlook in the range of $1.55-1.60. ESI anticipates generating free cash flow of between $310-$325 million for 2022.
The company also forecasts second-quarter 2022 adjusted EBITDA to be roughly $140 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Element Solutions has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Element Solutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Element Solutions (ESI) Down 1.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Element Solutions (ESI - Free Report) . Shares have lost about 1.7% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Element Solutions due for a breakout? 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 catalysts.
Element Solutions Tops Q1 Earnings and Revenues Estimates
Element Solutions recorded earnings (as reported) of 23 cents per share in first-quarter 2022 compared with 33 cents in the year-ago quarter.
Adjusted earnings per share came in at 38 cents in the quarter, which beat the Zacks Consensus Estimate of 35 cents.
The company generated net sales of $680.2 million, up around 24% year over year. The figure beat the Zacks Consensus Estimate of $644 million. Organic net sales rose 7%. The company benefited from strong demand across many of its major end-markets in the quarter amid challenges from increased macroeconomic uncertainty and cost inflation.
Segment Highlights
Net sales in the Electronics segment rose 21% year over year to $427 million in the reported quarter. Organic net sales were up 8% from the year-ago quarter’s reported figure.
Net sales in the Industrial & Specialty unit rose 29% year over year to $253 million. Organic net sales moved up 4% year over year.
Financial Position
Element Solutions ended the quarter with cash and cash equivalents of $218.8 million, down around 31% year over year. Long-term debt was $1,892.1 million at the end of the quarter, up roughly 26% year over year.
Net cash used in operating activities were $5.6 million for the quarter compared with net cash flows from operating activities of $32.6 million a year ago.
Outlook
The company raised the bottom-end of its guidance for adjusted EBITDA for 2022 to a range of $580-$590 million. It also reaffirmed its full-year adjusted earnings per share outlook in the range of $1.55-1.60. ESI anticipates generating free cash flow of between $310-$325 million for 2022.
The company also forecasts second-quarter 2022 adjusted EBITDA to be roughly $140 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Element Solutions has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Element Solutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.