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Albemarle (ALB) Shares Up 48% YTD: What’s Driving the Stock?

Zacks

Shares of Albemarle Corporation ALB have popped around 48% year to date. The chemical maker has also outperformed its industry’s gain of roughly 26% to over the same time frame.

Albemarle has a market cap of roughly $14.1 billion and average volume of shares traded in the last three months is around 1,346K. The company has an expected long-term earnings per share growth of 14.8%.

Let’s take a look into the factors that are driving this Zacks Rank #2 (Buy) stock.



Driving Factors

Forecast-topping earnings performance in the first three quarters of 2017 and an upbeat outlook for the full year have contributed to a rally in Albemarle’s shares. Albemarle, last month, posted strong third-quarter results with both earnings and revenues topping estimates. Adjusted earnings of $1.08 per share for the quarter beat the Zacks Consensus Estimate of $1.07. Revenues rose around 15% year over year to $754.9 million and also topped the Zacks Consensus Estimate of $737 million.

Sales in the quarter were aided by favorable impacts of pricing and higher sales volume in Lithium and Advanced Materials and Bromine segments as well as favorable currency impacts.

Albemarle raised its guidance for 2017. The company now sees full-year net sales of between $3 billion and $3.05 billion (compared with prior view of $2.90 billion and $3.05 billion), adjusted earnings per share of between $4.40 and $4.50 (compared with prior view of $4.20 and $4.40) and adjusted EBITDA of $860-$875 million (compared with $835-$875 million expected earlier).

Albemarle is seeing significant momentum in its lithium business and is well placed to leverage strong expected growth in the battery-grade lithium market. The buyout of the lithium assets of Jiangxi Jiangli New Materials Science and Technology Co. Ltd. has allowed Albemarle to supply premium lithium salts to an expanded global customer base and accelerated the company’s ability to meet its goal of capturing 50% of the growth in the lithium industry.

Albemarle is executing a number of projects that are likely to boost its global lithium derivative capacity to 165,000 metric tons by 2021. Albemarle’s Talison joint venture in Australia is expanding lithium concentrate production at its Greenbushes mine.

Moreover, Albemarle, in September, said that it has developed a novel technology that would allow it to increase annual lithium production in Chile on a sustainable basis to as much as 125,000 metric tons of lithium carbonate equivalent without requiring additional brine pumping at its facility in the Salar de Atacama. The move is part of the company’s efforts to beef up efficiencies and sustainability of its Atacama operations.

Projects currently underway are expected to raise the company’s total annual production capacity in Chile to more than 80,000 metric tons of lithium carbonate equivalent.

Albemarle Corporation Price and Consensus


Albemarle Corporation Price and Consensus | Albemarle Corporation Quote

Some Other Stocks to Consider

Other top-ranked companies in the basic materials space include Westlake Chemical Corporation WLK, Kraton Corporation KRA and Kronos Worldwide, Inc. KRO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake has an expected long-term earnings growth of 10.6%. Its shares are up roughly 75% year to date.

Kraton has an expected earnings growth of 25.4% for the current year. The stock has gained around 60% year to date.

Kronos has an expected long-term earnings growth of 5%. Its shares are up roughly 104% year to date.

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