Albemarle Corporation
ALB
will release fourth-quarter 2020 results after the closing bell on Feb 17. The company is likely to have benefited from its cost-reduction actions in the quarter. However, the impacts of demand weakness due to the coronavirus pandemic and soft lithium prices are likely to reflect on its results.
The company beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missed once. In this timeframe, it delivered an earnings surprise of 18.9%, on average.
Albemarle’s shares are up 84.2% over a year compared with a 19.4% rise of the
industry
it belongs to.
Let’s see how things are shaping up for this announcement.
Zacks Model
Our proven model predicts an earnings beat for Albemarle this time around. The combination of a positive
Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.
Earnings ESP:
Earnings ESP for Albemarle is +2.59%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at $1.11. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Zacks Rank:
Albemarle currently carries a Zacks Rank #3.
What do the Estimates Say?
Albemarle, earlier this month, said that it expects net sales for the fourth quarter in the band of $870-$880 million, which suggests a decline of 11-12% year-over-year. Adjusted earnings per share is forecast to be in the range of $1.11-$1.19.
The Zacks Consensus Estimate for revenues for Albemarle for the to-be-reported quarter stands at $877.1 million, reflecting a decline of 11.6% from the year-ago quarter.
The Zacks Consensus Estimate for net sales for the Lithium unit stands at $336 million, indicating an 18.2% year-over-year drop. The same for the Bromine Specialties segment for the fourth quarter is pegged at $236 million, reflecting an 2.9% decline on a year-over-year basis.
Moreover, the Zacks Consensus Estimate for net sales for the Catalysts segment is pinned at $226 million, indicating a 20% year-over-year decline.
Some Factors to Watch For
Benefits of the company’s cost-saving initiatives are expected to get reflected in the quarter to be reported. The company remains on track with its cost-saving program which is expected to deliver run rate savings of more than $120 million by the end of 2021. It expects to realize around $80 million of savings for full-year 2020. The company is also implementing short-term cash management actions which is expected to deliver $25-$40 million of savings per quarter.
However, impacts of lower lithium prices are expected to get reflected in the Lithium segment’s sales and margins in the fourth quarter. Lithium prices remain under pressure amid oversupply in the market. Pricing weakness is expected have continued in the fourth quarter amid excess global supply.
Moreover, impacts of the pandemic are likely to continue to have affected the Bromine Specialties unit in the December quarter. Demand weakness in certain markets such as energy and automotive is expected to have affected the performance of this segment in the quarter to be reported, offset by a recovery in electronics and building & construction.
Moreover, weak Hydroprocessing Catalysts (“HPC”) volumes are expected to have hurt results in the Catalysts unit in the fourth quarter. HPC volumes remain under pressure due to depressed oil prices and reduced refinery capacity utilization.
Albemarle Corporation Price and EPS Surprise
Albemarle Corporation price-eps-surprise
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Albemarle Corporation Quote
Other Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:
Teck Resources Limited
TECK
, scheduled to release earnings on Feb 18, has an Earnings ESP of +5.98% and carries a Zacks Rank #3. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
SSR Mining Inc.
SSRM
, scheduled to release earnings on Feb 17, has an Earnings ESP of +2.57% and carries a Zacks Rank #3.
Koppers Holdings Inc.
KOP
, scheduled to release earnings on Feb 24, has an Earnings ESP of +23.20% and carries a Zacks Rank #3.
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