Insights into Albemarle's Strong 3Q17 Returns

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Insights into Albemarle's Strong 3Q17 Returns PART 1 OF 6

Albemarle Stock Rose on Earnings Beat, Upward Revision

Albemarle’s 3Q17 earnings

Albemarle (ALB) announced its 3Q17 earnings on November 8, 2017. It reported adjusted EPS (earnings per share) from continuing operations at $1.08, an 18.7% rise on a YoY (year-over-year) basis. EPS beat analysts’ estimate of $1.07. In 3Q16, ALB posted adjusted EPS of $0.91.

Albemarle Stock Rose on Earnings Beat, Upward Revision

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The YOY growth in adjusted EPS was driven primarily by higher sales from its Lithium and Advanced Materials segment and no acquisition or integration costs in the quarter. A reduction in outstanding shares by 2.3 million in 2Q17 helped improve its adjusted EPS. The total number of outstanding shares at the end of 3Q17 was ~112 million, compared to ~113.5 million in 3Q16.

Stock price reactions

ALB stock reacted positively to the results and rose 1.0%, closing at $144.58 on November 8, 2017. That same day, its peer Sociedad Quimica y Minera de Chile (SQM) remained flat. However, the next day, ALB stock fell 2.6% and closed at $140.84.

Outlook and guidance

The strong demand for lithium is expected to continue and drive Albemarle’s growth. With its strong 3Q17 performance, ALB made an upward revision to its adjusted EPS for 2017. It now expects 2017 adjusted EPS to be $4.40–$4.50 against the earlier guidance of $4.20–$4.40.

ALB also raised its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for 2017 to $860 million–$875 million compared to the earlier guidance of $4.2 million–$4.4 million.

Investors looking for indirect exposure to ALB can invest in the Global X Lithium ETF (LIT), which has invested 4.3% of its portfolio in Albemarle. The fund also provides exposure to FMC (FMC) and Tesla Motors (TSLA) with weights of 15.2% and 2.6%, respectively, as of November 8, 2017.


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