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Albemarle’s 2Q17 Earnings Beat Analyst Estimates but Its Stock Falls

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Albemarle’s 2Q17 earnings

Albemarle (ALB) announced its 2Q17 earnings on August 7, 2017, after market hours. ALB reported adjusted earnings per share (or EPS) from its continued operations of $1.13, an increase of 21.5% on a year-over-year basis.

In 2Q16, ALB reported adjusted EPS of $0.93. Analysts estimated ALB to post adjusted EPS of $1.11.

The company’s adjusted earnings per share exclude inventory markup, restructuring acquisition-related costs, and several other items equaling $0.21 per share. ALB’s increase in adjusted EPS is primarily driven by higher sales from the Lithium and Advanced Materials segment. The price increases in this segment helped improve its adjusted EPS.

Another factor that drove up ALB’s adjusted EPS is its share repurchases. At the end of 2Q17, ALB had 112.1 million shares outstanding compared to ~113.2 million shares outstanding in 2Q16. In the first six months of fiscal 2017, ALB repurchased ~2.3 million shares.

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Stock price reaction

ALB’s stock price reached an all-time high of $123.00 before the company announced its 2Q17 earnings on August 7. However, the stock fell 6.2% the next day and closed at $115.41.

Outlook and guidance

Albemarle (ALB) expects to bank on the strong performance of its Lithium and Advanced Materials segment. The acquisition and capacity expansions to meet the growing demand is expected to drive the company’s growth.

Albemarle maintained its guidance of adjusted EPS for fiscal 2017 to be in the range of $4.20–$4.40. It also maintained that its adjusted EBITDA[1. earnings before interest, taxes, depreciation, and amortization] would be in the range of $835 million–$875 million for fiscal 2017.

Investors can indirectly hold Albemarle by investing in the Global X Lithium ETF (LIT), which invests 7.0% of its portfolio in ALB. The fund also has exposure to FMC (FMC), Sociedad Química y Minera de Chile (SQM), and Tesla Motors (TSLA), with respective weights of 27.4%, 9.8%, and 4.7% on August 7, 2017.

In this series, we’ll analyze ALB’s 2Q17 earnings, revenues, the performance of its reporting segments, and the latest analysts’ estimates.

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