Albemarle (ALB) Down 4.1% Since Last Earnings Report: Can It Rebound?

About a month has passed since Albemarle (ALB) last reported earnings. Shares have lost about 4.1% in that time, 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 the company’s most recent earnings report in order to better understand the important catalysts.

Albemarle’s best third-quarter earnings and revenue estimates

Albemarle reported a third-quarter 2021 net loss of $392.8 million, or $3.36 per share, from a profit of $98.3 million, or 92 cents per share, a year ago. The loss was attributed to a recent arbitration award in a dispute over Huntsman Corporation’s 2014 acquisition of Rockwood’s Pigments & Additives.

Adjusted earnings for the reported quarter were $1.05 per share, compared with $1.09 a year earlier. The bottom line surpassed the Zacks Consensus Estimate of 75 cents.

Revenues increased approximately 11.2% year-over-year to $830.6 million for the quarter and surpassed the Zacks Consensus Estimate of $775.6 million. The results were supported by higher sales in the company’s lithium and bromine business segments.

The most important information in the segment

Lithium unit sales increased approximately 35.3% year-over-year to $359.2 million in the reported quarter, supported by higher volumes (up 30%) driven by tolls to meet growing customer demand and higher prices and favorable exchange rates currencies. Adjusted EBITDA increased approximately 28.2% year-over-year to $125.4 million, driven by higher sales and volumes at the Talison joint venture.

The Bromine Specialties segment reported sales of $277.8 million, up approximately 17.1% year-over-year. Sales were supported by strong prices and a favorable currency. Prices were driven by strong demand across the product portfolio and market tightening. Adjusted EBITDA was $86 million, up approximately 8.3% year-over-year, driven by higher sales, offset by higher raw material and transportation costs.

The Catalysts unit posted revenue of $193.6 million in the reported quarter, down approximately 2.2% year-over-year, due to lower volumes (down 1%), pricing and unfavorable currency translation. Adjusted EBITDA was $33.1 million, down approximately 12.5% ​​year-over-year due to lower sales, partially offset by higher-than-expected equity income.

Financial position

Albemarle ended the quarter with approximately $595 million in cash and cash equivalents, down approximately 15% year-over-year. Long-term debt was $2,021.5 million, down approximately 31.3%.

Cash flow from operations was approximately $491 million for the nine months ended September 30, 2021, representing an increase of approximately 6.3% year-over-year.

Perspectives

Going forward, Albemarle expects full-year 2021 results to improve moderately on a year-over-year basis amid a sustained recovery in global economic activity.

The company expects 2021 net sales to be between $3.3 billion and $3.4 billion. Sees higher lithium sales. However, bromine business volumes are expected to be impacted by sell-out conditions and stock shortages. Higher freight and raw material costs are likely to be partially offset by cost-saving initiatives and higher pricing in this segment. For the catalytic converter segment, volumes are not expected to return to pre-pandemic levels before the end of 2022 or 2023.

Additionally, Albemarle now forecasts 2021 adjusted earnings per share in the range of $3.85-$4.15, compared to its prior guidance of $3.35-$3.70.

How have estimates changed since then?

Over the last month, investors have seen an upward trend in new estimates. As a result of these changes, the consensus estimate moved by 13.47%.

VGM results

At this point, Albemarle has an average growth score of C, which is a grade with the same dynamic score. Plotting a somewhat similar path, the stock received a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has a Total VGM Score of D. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. Notably, Albemarle carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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