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Albemarle (ALB) Down 6% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Albemarle Corporation (ALB - Free Report) . Shares have lost about 6% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is ALB due for a breakout? 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 Q1 Earnings Top Estimates on Lithium Strength

Albemarle saw its profits surge in the first quarter of 2018, buoyed by strong gains in its Lithium unit. The company posted a profit of $131.8 million or $1.18 per share in the quarter, a roughly two-and-a-half fold jump from a profit of $51.2 million or 45 cents per a year ago.

Barring one-time items, adjusted earnings for the reported quarter were $1.30 per share, topping the Zacks Consensus Estimate of $1.20.

Revenues rose around 14% year over year to $821.6 million in the reported quarter. It also topped the Zacks Consensus Estimate of $807 million. Sales in the quarter were aided by favorable pricing and currency impacts and higher sales volumes, mainly in the Lithium division.

Segment Highlights

Sales from the Lithium unit jumped around 38% year over year to $ $298 million in the reported quarter, supported by favorable pricing, higher sales volumes and favorable currency impacts. Adjusted EBITDA climbed roughly 31% year over year to $131 million.

The Bromine Specialties segment raked in sales of $225.6 million, up around 3% year over year, driven by favorable pricing and currency impacts. Adjusted EBITDA was $70 million, up around 2% year over year.

The Catalysts unit reported revenues of $260.7 million in the reported quarter, up roughly 3% year over year. The division’s sales were supported by favorable pricing and positive currency impacts. Adjusted EBITDA was $67.8 million, down roughly 3% year over year.

Financial Position

Albemarle ended the quarter with cash and cash equivalents of roughly $692.2 million, down roughly 45% year over year. Long-term debt was $1,436.9 million, up around 3% year over year.

Cash flow from operations was roughly $121.6 million for the first quarter, up 47% year over year, aided by higher earnings in the Lithium unit.

Guidance

Albemarle raised its adjusted earnings per share outlook for 2018. The company now sees adjusted earnings for the year to be in the band of $5.10-$5.40 per share (up from earlier view of $5.00 and $5.40), a year-over-year increase of 11.

The company continues to envision net sales for 2018 to be between $3.2 billion and $3.4 billion. Adjusted EBITDA has been forecast in the range of $955 million to $1,005 million.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been seven revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 6.8% due to these changes.

Albemarle Corporation Price and Consensus

VGM Scores

At this time, ALB has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Our style scores indicate that the stock is more suitable for momentum investors than value investors.

Outlook

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




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