Albemarle (ALB) To Report Q1 Earnings: What's In The Offing?

Albemarle Corporation (NYSE:ALB) will release first-quarter 2019 results after the bell on May 8. The company will likely face some pressure on its lithium volumes in the quarter.

Albemarle’s shares have lost around 23% over a year, compared with the roughly 24.1% decline recorded by the industry it belongs to.

Let’s see how things are shaping up for this announcement.

What do the Estimates Say?

Albemarle, in its fourth-quarter call, said that its performance in 2018 and execution of its lithium growth projects have positioned it for another year of growth in 2019.

The Zacks Consensus Estimate for revenues for Albemarle for the to-be-reported quarter stands at $808 million, reflecting an expected decline of 1.7% from the year-ago quarter.

The Zacks Consensus Estimate for net sales for the Lithium unit for the first quarter is pegged at $336 million, reflecting a 13% rise on a year over year basis.

Moreover, net sales for the Bromine Specialties segment is projected to see a 3.1% year-over-year increase as the Zacks Consensus Estimate for the first quarter is pegged at $233 million.

The Zacks Consensus Estimate for the company’s Catalysts segment stands at $233 million, indicating a year over year decline of 10.7%.

Factors to Consider

Albemarle faces some headwinds the first quarter. The company, in March, stated that its Lithium unit is expected to witness a shift in volumes of roughly 3,000-3,500 metric tons on LCE basis from the first quarter to subsequent quarters in 2019.

The volume shift is expected to dent first-quarter performance by roughly $40-$45 million in revenues and $15-$18 million in EBITDA.

Per the company, the shortfall in volume was mainly due to the timing of customer qualifications of lithium hydroxide from Xinyu II and lithium carbonate from toll manufacturers. Production issues at the La Negra site, Chile, due to the disruption of fresh water supply also affected volumes in the first quarter. Nevertheless, Albemarle envisions that the shortfall to be recovered during the remainder of 2019.

Meanwhile, the company’s Catalysts segment faces some challenges from an expected decline in Performance Catalyst Solutions business this year due to pricing pressures and the loss of a large customer contract. Nevertheless, the division will likely gain from strength in the refining catalyst business driven by healthy demand in FCC catalysts in the March quarter.

For Bromine Specialties, demand for flame retardants is expected to be stable in the first quarter.

Albemarle Corporation Price and EPS Surprise

Albemarle Corporation price-eps-surprise | Albemarle Corporation Quote

Zacks Model

Our proven model shows that Albemarle is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is the case here, as you will see below:

Earnings ESP: Earnings ESP for Albemarle is +0.47%. The Most Accurate Estimate is $1.22 while the Zacks Consensus Estimate is pegged at $1.21. 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, which when combined with a positive ESP makes us reasonably confident of earnings beat.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some other 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:

Intrepid Potash, Inc. (NYSE:IPI) has an Earnings ESP of +25.00% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Covia Holdings Corporation (NYSE:CVIA) has an Earnings ESP of +17.34% and carries a Zacks Rank #3.

Bunge Limited (NYSE:BG) has an Earnings ESP of +5.00% and carries a Zacks Rank #3.

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