Albemarle Corp. ALB takes pride as a global leader in supplying essential elements for mobility, energy, connectivity, and health. However, the company’s fortunes have taken a sour turn, as analysts have downgraded their earnings expectations over the past several months. This downgrade has hampered the stock’s performance, landing it in the unfavorable Zacks Rank #5 (Strong Sell).
In addition, the company is currently placed in the Zacks Chemical – Diversified industry, which currently resides in the bottom 10% of all Zacks industries. Let’s delve deeper into a few other facets of the company.
The Unsettling Scenario
Over the past year, Albemarle’s shares have suffered a significant decline, plummeting by more than 50% and substantially underperforming in comparison to the S&P 500. The company has also struggled after its recent quarterly reports, with the stock spiraling downward post-earnings in consecutive releases.
The latest quarterly release saw the company miss the Zacks Consensus EPS estimate by nearly 26% and post sales 3.4% below expectations. The downward trajectory has been exacerbated by falling lithium prices, as evident from the illustration below.
Looking Ahead
It’s crucial to note that the company is scheduled to unveil its next set of results on February 14th after the market’s close. Revenue and earnings projections have been revised lower by analysts, with the expected $2.3 billion down nearly 7% since last November.
The unappealing price action has propelled ALB’s yield, with shares now paying out 1.4% annually paired with a sustainable 8% payout ratio. Although Albemarle has shown commitment to increasingly rewarding shareholders, currently carrying a 2% five-year annualized dividend growth rate.
The Final Verdict
Negative earnings estimate revisions from analysts, catalyzed by diminishing lithium prices, paint a challenging picture for the company’s shares in the near term.
Albemarle ALB is currently pegged at Zacks Rank #5 (Strong Sell), signaling a pessimistic outlook on the company’s earnings prospects. For investors seeking solid stocks, it’s advisable to focus on equities holding a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks boast a notably stronger earnings outlook with the potential to deliver substantial gains in the near term.
For those intrigued by the semiconductor industry, there’s an enticing prospect waiting. The semiconductor market is projected to explode from $452 billion in 2021 to $803 billion by 2028, providing ample opportunity for growth. However, it’s prudent to conduct thorough due diligence before diving into any investment.
