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Albemarle (ALB) to Report Q2 Earnings: What's in the Cards?

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Albemarle Corporation (ALB - Free Report) will release second-quarter 2019 results after the bell on Aug 7.

The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. In this timeframe, it delivered an average positive surprise of around 4.4%.

Albemarle’s shares have lost around 25.9% over a year, compared with the roughly 40.2% decline recorded by the industry it belongs to.


 

Let’s see how things are shaping up for this announcement.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for Albemarle for the to-be-reported quarter stands at $876 million, reflecting an expected increase of 2.6% from the year-ago quarter.

The Zacks Consensus Estimate for net sales for the Lithium unit for the second quarter is pegged at $359 million, reflecting a roughly 13% rise on a year over year basis.

Moreover, net sales for the Bromine Specialties segment is projected to see a roughly 7% year-over-year increase as the Zacks Consensus Estimate for the second quarter is pegged at $237 million.

The Zacks Consensus Estimate for the company’s Catalysts segment stands at $261 million, indicating a year over year decline of around 8%.

Some Factors to Watch For

Albemarle, in its first-quarter call, noted that it sees earnings in the second quarter to be flat on a year-over-year basis.

Sales from the company’s Lithium unit fell in the first quarter on lower sales volumes due to the rain event in Chile. However, the division will likely benefit from higher expected volumes and pricing in the to-be-reported quarter.

Moreover, the company is expected to gain from continued strong demand for flame retardants, especially in electronics, in the June quarter, supporting volumes in its Bromine Specialties unit. The Catalysts division will also likely gain from strength in the refining catalyst business.

However, Albemarle is exposed to certain headwinds. Unfavorable currency swings, stemming from a stronger dollar against various currencies, impacted its sales by $13.3 million in the first quarter. Unfavorable impact on sales for the Lithium segment was $5.7 million in the quarter. Impact for Bromine Specialties and Catalysts units were $3 million and $4.6 million, respectively. Currency headwind will likely continue in the second quarter.

Moreover, the company’s Catalysts segment faces some challenges from an expected decline in Performance Catalyst Solutions (PCS) business in 2019 due to pricing pressures and the loss of a large customer contract. Albemarle sees PCS related headwinds of $11 million in 2019. The company expects earnings in the Catalysts unit to fall year over year in the second quarter.

The company also faces headwind from higher raw material costs across its Bromine Specialties and Catalysts segments.

Albemarle Corporation Price and EPS Surprise

 

Albemarle Corporation Price and EPS Surprise

Albemarle Corporation price-eps-surprise | Albemarle Corporation Quote

Zacks Model

Our proven model does not show that Albemarle is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Earnings ESP: Earnings ESP for Albemarle is -2.91%. The Zacks Consensus Estimate for the second quarter is currently pegged at $1.41. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Albemarle currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some other companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Barrick Gold Corporation (GOLD - Free Report) has an Earnings ESP of +0.70% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Covia Holdings Corporation (CVIA - Free Report) has an Earnings ESP of +20.00% and a Zacks Rank #3.

Brigham Minerals, Inc. (MNRL - Free Report) has an Earnings ESP of +2.06% and a Zacks Rank #3.
 
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