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Albemarle's (ALB) Shares Pop 21% in 3 Months: Here's Why

Zacks Equity Research
·4 min read

Albemarle Corporation’s ALB shares have gained 21.1% over the past three months. The company has also outperformed its industry’s decline of 3.8% over the same time frame. It has also topped the S&P 500’s roughly 0.8% rise over the same period.

Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

What’s Working in ALB’s Favor?

Albemarle is gaining from higher volumes in its lithium business on a recovery in global economic activities. Higher customer demand, new capacity and plant productivity improvements are supporting volumes. The La Negra III/IV expansion in Chile is also contributing to higher volumes. Strong lithium prices are also supporting its performance. Tight supply conditions and growing demand for electric vehicles are driving lithium prices. The company’s bromine business is also gaining from strong demand and favorable pricing led by tight market conditions. Albemarle is seeing strong demand for flame retardants.

The company is also strategically executing its projects aimed at boosting its global lithium conversion capacity. It remains focused on investing in high-return projects to drive productivity. The company is well placed to gain from long-term growth in the battery-grade lithium market.

Albemarle is also benefiting from cost-saving and productivity initiatives. Its cost actions are expected to support its margins in 2022.

Albemarle, last month, raised its net sales outlook for 2022 factoring in continued strength in pricing in its Lithium and Bromine businesses. The company envisions net sales for 2022 to be in the band of $7.1-$7.5 billion, up from $5.8-$6.2 billion it expected earlier. Adjusted EBITDA for the year is now forecast to be $3.2-$3.5 billion, up from the prior view of $2.2-$2.5 billion. Albemarle also sees adjusted earnings per share for 2022 in the band of $19.25-$22.25, up from $12.30-$15.00 it expected earlier.

Earnings estimates for Albemarle have also been going up over the past two months. The Zacks Consensus Estimate for 2022 has increased around 67.9%. The consensus estimate for the third quarter of 2022 has also been revised 86.2% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

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Albemarle Corporation Price and Consensus

 

Albemarle Corporation Price and Consensus
Albemarle Corporation Price and Consensus

Albemarle Corporation price-consensus-chart | Albemarle Corporation Quote

 

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Livent Corporation LTHM, Innospec Inc. IOSP and Sociedad Quimica y Minera de Chile S.A. SQM.

Livent, currently sporting a Zacks Rank #1, has a projected earnings growth rate of 667% for the current year. The Zacks Consensus Estimate for LTHMs current-year earnings has been revised 9.5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Livent’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 15.7%. LTHM has gained around 32% in a year.

Innospec, currently carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 23.5% for the current year. The consensus estimate for IOSP's earnings for the current year has been revised 6.1% upward in the past 60 days.

Innospec’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. IOSP has gained around 7% over a year.

Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 18.8% upward in the past 60 days.

Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 78% in a year. The company carries a Zacks Rank #2.


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Albemarle Corporation (ALB) : Free Stock Analysis Report
 
Sociedad Quimica y Minera S.A. (SQM) : Free Stock Analysis Report
 
Innospec Inc. (IOSP) : Free Stock Analysis Report
 
Livent Corporation (LTHM) : Free Stock Analysis Report
 
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Zacks Investment Research