Albemarle (ALB) Q1 Earnings Preview: A Beat in the Cards?
Albemarle Corporation ALB will release its first-quarter 2017 results after the bell on May 3.
The chemical maker’s adjusted earnings of 78 cents per share for fourth-quarter 2016 topped the Zacks Consensus Estimate of 75 cents. Revenues of $696.7 million also beat the Zacks Consensus Estimate of $599.8 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 14.28%.
Let’s see how things are shaping up for this announcement.
Albemarle Corporation Price and EPS Surprise
Albemarle Corporation Price and EPS Surprise | Albemarle Corporation Quote
Earnings Whispers
Our proven model shows that Albemarle is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: The Earnings ESP for Albemarle is +1.05% as the Most Accurate Estimate stands at 96 cents while the Zacks Consensus Estimate is pegged at 95 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Albemarle currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Conversely, sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Albemarle’s Zacks Rank #3 and positive ESP makes us reasonably confident of an earnings beat.
Factors to Consider
Albemarle, in its fourth-quarter 2016 call, noted that its performance in 2016 and strategic initiatives have positioned it for strong growth in 2017. Albemarle sees net sales of $2.8-$2.95 billion and adjusted earnings per share of $4.00-$4.25 for 2017, reflecting an increase from sales of around $2.7 billion and adjusted earnings of $3.57 per share it registered in 2016.
Moreover, the company expects adjusted EBITDA for 2017 to be between $800 million and $840 million, also higher than $758.2 million logged in 2016.
Albemarle remains focused on strengthening its lithium business. It is well placed to leverage strong expected growth in the battery-grade lithium market. The company recently said that its Talison joint venture in Australia has approved the expansion of lithium concentrate production at its Greenbushes mine. The expansion will more than double the lithium carbonate equivalent capacity at Greenbushes from 80,000 metric tons per year to more than 160,000 metric tons.
Moreover, the acquisition 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 is also selling non-core businesses and assets to boost growth opportunities and focus on its core bromine, lithium, catalysts and surface treatment businesses. As part of this move, the company has sold its Chemetall Surface Treatment unit to German chemical giant BASF BASFY for around $3.2 billion. The sale is a part of Albemarle's sustained commitment to boost shareholder value by investing in the growth of its high priority businesses.
Albemarle has significantly outperformed the Zacks categorized Chemicals-Diversified industry over a year, partly reflecting its forecast-topping earnings performance and its strategic growth initiatives. The company’s shares have gained around 60.3% over this period, compared with roughly 15.8% gain recorded by the industry.