Albemarle (ALB) Down 1.2% Since Last Earnings Report: Can It Recover?

A month has passed since the last earnings report of Albemarle (ALB). Shares lost about 1.2% 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 the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

Albemarle earnings miss first-quarter estimates, revenues beat

Albemarle reported a loss of 8 cents per share in the first quarter of 2024. In the same quarter last year, the company reported a profit of $10.51 per share.

Adjusted earnings for the reported quarter were 26 cents per share, missing the Zacks Consensus Estimate of 35 cents.

Revenue fell about 47% year-over-year to about $1.36 billion in the quarter. However, the figure surpassed the Zacks Consensus Estimate of $1.31 billion. The result was negatively affected by lower prices in the Energy Warehouse. The company’s results were influenced by lower prices on the lithium market this quarter.

The most important information in the segment

Energy storage unit sales fell approximately 59% year-over-year to $800.9 million. This result exceeded the consensus estimate of $720.1 million. The decline in sales is due to price reductions. However, sales volumes increased in part due to the development of lithium-related projects, including the La Negra III/IV expansion in Chile and a processing plant in Qinzhou, China.

The Specialties segment reported sales of $316.1 million, down approximately 25% year-over-year. This was below the consensus estimate of $362.7 million. Lower volumes and falling prices had an impact on sales.

The Ketjen unit posted revenue of $243.8 million in the reported quarter, up approximately 12% year-over-year. This was below the consensus estimate of $253.4 million. Higher prices and higher volumes helped sales.

Financial position

Albemarle ended the quarter with approximately $2.06 billion in cash and cash equivalents, representing sequential growth of approximately 131%. Long-term debt was approximately $3.5 billion and was essentially unchanged sequentially.

Perspectives

Albemarle said energy storage volume growth is trending towards the high end of its previously stated 2024 growth outlook of 10-20% year-over-year.

The company expects specialty net sales in the range of $1.3 billion to $1.5 billion, with adjusted EBITDA of $270 million to $330 million. The Ketjen segment is projected to have net sales of $1 billion to $1.2 billion and adjusted EBITDA of $130 million to $150 million.

Capital expenditures for 2024 are projected to be between $1.6 billion and $1.8 billion, and depreciation and amortization are expected to be between $580 million and $660 million. Corporate costs are expected to be between $120 million and $150 million, and interest and financing costs are expected to be between $180 million and $210 million.

The company is on track to deliver more than $280 million in productivity benefits in 2024.

How have estimates changed since then?

It turns out that estimate revisions have been trending upwards over the past month.

As a result of these changes, the consensus estimate moved by 59.71%.

VGM results

Right now, Albemarle has a weak Growth Score of D, but its Momentum Score is doing slightly better at C. Plotting a somewhat similar path, the stock is rated 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.

Industry player performance

Albemarle is part of the Zacks Chemical – Diversified industry. Shares of Air Products and Chemicals (APD) in the same industry have gained 6.9% over the past month. More than a month ago, the company published its results for the quarter ended March 2024.

In the most recent quarter, Air Products and Chemicals reported revenue of $2.93 billion, representing a year-over-year change of -8.4%. EPS of $2.85 in the same period compared to $2.74 a year ago.

Air Products and Chemicals is expected to report earnings per share of $3.04 per share for the current quarter, representing a year-over-year change of +2%. Over the past 30 days, the Zacks Consensus Estimate has moved +0.6%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Air Products and Chemicals. The stock also has a VGM Rating of F.

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