Albemarle Corporation ALB will release its third-quarter 2017 results after the bell on Nov 8.
The chemical maker’s adjusted earnings of $1.13 per share for second-quarter 2017 topped the Zacks Consensus Estimate of $1.11.
Revenues rose around 10% year over year to $737.3 million, aided by favorable impacts of pricing and higher sales volume in the Lithium and Advanced Materials division. Sales, however, trailed the Zacks Consensus Estimate of $740.6 million.
Albemarle has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 7.2%.
Albemarle has outperformed the industry it belongs to over a year, partly reflecting its forecast-topping earnings performance and its strategic growth initiatives. The company’s shares have rallied around 62.3% over this period, compared with roughly 33.1% gain recorded by the industry.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Albemarle, in August, reaffirmed its guidance for 2017. The company continues to see full-year net sales of between $2.90 and $3.05 billion, adjusted earnings per share of between $4.20 and $4.40 and adjusted EBITDA of $835-$875 million.
The Zacks Consensus Estimate for revenues for Albemarle for the to-be-reported quarter stands at $737 million, reflecting an increase of 12.7% from the year-ago quarter.
Strength in the company’s core Lithium and Advanced Materials division boosted its second-quarter results and is expected to continue to drive its results in the third quarter.
Albemarle is seeing significant momentum in its lithium business and is well placed to leverage strong expected growth in the battery-grade lithium market. The buyout of the lithium assets of Jiangxi Jiangli New Materials Science and Technology Co. Ltd. has allowed Albemarle to supply premium lithium salts to an expanded global customer base and accelerated the company’s ability to meet its goal of capturing 50% of the growth in the lithium industry.
Albemarle’s Talison joint venture in Australia is also expanding lithium concentrate production at its Greenbushes mine. Moreover, Albemarle, in September, said that it has developed a novel technology that would allow it to increase annual lithium production in Chile on a sustainable basis to as much as 125,000 metric tons of lithium carbonate equivalent without requiring additional brine pumping at its facility in the Salar de Atacama. The move is part of the company’s efforts to beef up efficiencies and sustainability of its Atacama operations.
Sales from the company’s Lithium and Advanced Materials unit jumped 36% year over year to $317.9 million in the second quarter, supported by favorable pricing and higher sales volume. The division’s results are expected to continue to be boosted by higher pricing and volumes in the third quarter.
Albemarle sees average pricing for the division to increase around 20% for 2017. It also expects its lithium business to deliver adjusted EBITDA growth of more than 35% year over year in 2017.
While sales and margins in the company’s Bromine Specialties segment were affected by reduced pricing and unfavorable currency impact in the second quarter, healthy flame retardant demand in electronics applications is expected to support the division’s results through the second half of 2017. Albemarle also expects an improved second half for its Refining Solutions unit.
Albemarle Corporation Price and EPS Surprise
Albemarle Corporation price-eps-surprise | Albemarle Corporation Quote
Earnings Whispers
Our proven model does not conclusively show that Albemarle is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: The Earnings ESP for Albemarle is -1.04% as the Most Accurate estimate stands at $1.06 while the Zacks Consensus Estimate is pegged at $1.07. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Albemarle carries a Zacks Rank #2 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 to Consider
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:
Westlake Chemical Corporation WLK has an Earnings ESP of +2.40% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Versum Materials, Inc. VSM has an Earnings ESP of +9.47% and sports a Zacks Rank #3.
Pan American Silver Corp. PAAS has an Earnings ESP of +12% and a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment