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Albemarle (ALB) Down 5.7% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Albemarle (ALB - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Albemarle 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 drivers.

Albemarle's Earnings & Revenues Top Estimates in Q1

Albemarle recorded a profit of $133.6 million or $1.26 per share in the first quarter of 2019, up from $131.8 million or $1.18 per share it earned year ago. The bottom line in the reported quarter was aided by earnings growth in the company’s Bromine Specialties segment.

Adjusted earnings for the reported quarter were $1.23 per share, topping the Zacks Consensus Estimate of $1.21.

Revenues rose around 1% year over year to $832.1 million in the quarter. It also surpassed the Zacks Consensus Estimate of $807.8 million.

Revenues were aided by favorable pricing across the board and higher sales volume across Bromine Specialties and Catalysts segments, offset by lower sales volume in the Lithium unit and the impact of the divestment of the polyolefin catalysts and components portion of the Performance Catalyst Solutions business.

Segment Highlights

Sales from the Lithium unit fell around 2% year over year to $291.9 million in the reported quarter as lower sales volume due to rain in Chile and unfavorable currency impact more than offset favorable pricing. Adjusted EBITDA dropped roughly 12% year over year to $115.6 million, hurt by higher costs of goods sold and lower volumes.

The Bromine Specialties segment logged sales of $249.1 million, up around 10% year over year, driven by favorable pricing and higher volumes. Adjusted EBITDA was $78.6 million, up around 12% year over year.

The Catalysts unit recorded revenues of $251.6 million in the reported quarter, down roughly 4% year over year, impacted by the polyolefin catalysts divestiture and unfavorable currency swings. Adjusted EBITDA was $60.1 million, down roughly 11% year over year.

Financial Position

Albemarle ended the quarter with cash and cash equivalents of roughly $465.3 million, down roughly 33% year over year. Long-term debt was $1,393.9 million, down around 3% year over year.

Cash flow from operations was $54.9 million for the quarter, down around 18% year over year. Capital expenditures were $216.1 million.

Outlook

The company reaffirmed its outlook for 2019. It continues to see adjusted earnings for 2019 in the band of $6.10-$6.50 per share, a year-over-year increase of 11-19%.

The company also backed its net sales guidance for 2019 of between $3.65 billion and $3.85 billion, representing 8-14% year over year growth.  Adjusted EBITDA for the year has been forecast in the range of $1,070 million to $1,140 million, representing 6-13% year over year growth.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Albemarle has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Albemarle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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