Albemarle Corporation
ALB
will release third-quarter 2020 results after the closing bell on Nov 4. The company is likely to have gained from its cost-saving actions in the quarter. However, the impacts of demand softness due to the coronavirus pandemic and weak 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 9.7%, on average.
Albemarle’s shares are up 27.6% year to date compared with a 6% decline 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 +5.73%. The Zacks Consensus Estimate for earnings the third quarter is currently pegged at 78 cents. 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, in August, said that it expects net sales for the third quarter of between $700 million and $775 million.
The Zacks Consensus Estimate for revenues for Albemarle for the to-be-reported quarter stands at $733.5 million, reflecting a decline of 16.6% from the year-ago quarter.
The Zacks Consensus Estimate for net sales for the Lithium unit stands at $260 million, indicating a 21.2% year-over-year drop. The same for the Bromine Specialties segment for the third quarter is pegged at $235 million, reflecting an 8.2% decline on a year-over-year basis.
Moreover, the Zacks Consensus Estimate for net sales for the Catalysts segment is pinned at $193 million, indicating a 26% 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 is accelerating its $100 million cost-saving program. It expects to realize $50-$70 million of savings this year. 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 demand weakness and lower lithium prices are expected to get reflected in the Lithium segment’s sales and margins in the third quarter. The Lithium unit faces headwinds from soft demand due to the pandemic and pricing weakness. Lithium prices remain under pressure amid oversupply in the market. The pandemic is also hurting demand in the automotive market due to reduced automotive OEM (original equipment manufacturer) production.
Impacts of coronavirus are also likely to have hurt demand In the Bromine Specialties unit in the third quarter. Weakness in certain markets including flame retardants and drilling fluids is expected to have continued in the September quarter.
Moreover, results in the Catalysts unit are expected to be hurt by weak Hydroprocessing Catalysts (“HPC”) volumes. HPC volumes remain under pressure due to lower oil prices and softer fuel demand. Some weakness in Fluid Catalytic Cracking demand is also likely to have continued in the third quarter due to subdued transportation fuel consumption.
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 you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:
Green Plains Inc.
GPRE
, scheduled to release earnings on Nov 4, has an Earnings ESP of +1.82% and carries a Zacks Rank #2. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Franco-Nevada Corporation
FNV
, scheduled to release earnings on Nov 4, has an Earnings ESP of +0.14% and carries a Zacks Rank #3.
Cabot Corporation
CBT
, scheduled to release earnings on Nov 9, has an Earnings ESP of +26.44% and carries a Zacks Rank #3.
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