It has been about a month since the last earnings report for Albemarle (ALB). Shares have added about 11.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Albemarle due for a pullback? 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 catalysts.
Albemarle's Q1 Earnings Top Estimates, Revenues Miss
Albemarle logged a profit of $1,238.6 million or $10.51 per share in the first quarter of 2023, up from a profit of $253.4 million or $2.15 per share a year ago.
Adjusted earnings in the reported quarter were $10.32 per share, topping the Zacks Consensus Estimate of $6.93.
Revenues climbed roughly 129% year over year to $2,580.3 million in the quarter, However, it trailed the Zacks Consensus Estimate of $2,736.5 million. The top line was driven by higher lithium pricing and increased volumes.
Sales from the Energy Storage unit surged 319% year over year to $1,943.7 million. Sales were driven by higher pricing (up 301% net of currency) associated with renegotiated contracts and higher market pricing. Volumes rose 18% in the quarter on the back of the La Negra III/IV expansion in Chile and increased tolling volumes to meet rising customer demand.
The Specialties segment recorded sales of $418.8 million, down around 6% year over year. Sales were impacted by 15% lower volumes, partly offset by a 9% (net of currency) rise in pricing.
The Ketjen unit recorded revenues of $217.8 million in the reported quarter, flat year over year. Volumes fell 12% while pricing increased 12% (net of currency).
Albemarle ended the quarter with cash and cash equivalents of roughly $1,586.7 million, up more than three-fold year over year. Long-term debt was around $3,233.4 million, up around 62% year over year.
Cash flow from operations was $721 million for the quarter, up more than three-fold year over year.
Albemarle now expects net sales in the band of $9.8-$11.5 billion for 2023 compared with $11.3-$12.9 billion expected earlier. It sees continued global shift to electric vehicles to drive a 35-55% year-over-year rise in net sales in 2023. Adjusted EBITDA for the year is now forecast to be $3.3-$4 billion, compared with $4.2-$5.1 billion expected earlier.
Albemarle also sees adjusted earnings per share guidance for 2023 in the band of $20.75-$25.75, down from its earlier view of $26.00-$33.00.
The company anticipates capital expenditures of $1.7-$1.9 billion for 2023. Net cash from operations is projected to be $1.7-$2.3 billion for the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -25.29% due to these changes.
At this time, Albemarle has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
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.
Performance of an Industry Player
Albemarle is part of the Zacks Chemical - Diversified industry. Over the past month, DuPont de Nemours (DD), a stock from the same industry, has gained 5.3%. The company reported its results for the quarter ended March 2023 more than a month ago.
DuPont de Nemours reported revenues of $3.02 billion in the last reported quarter, representing a year-over-year change of -7.8%. EPS of $0.84 for the same period compares with $0.82 a year ago.
For the current quarter, DuPont de Nemours is expected to post earnings of $0.83 per share, indicating a change of -5.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for DuPont de Nemours. Also, the stock has a VGM Score of D.
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