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Albemarle Corp ALB

Morningstar Rating
$120.65 +2.47 (2.09%)
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Company Report

Albemarle Earnings: Cost Reductions Should Help Profits Amid Lower Lithium Price Environment

Albemarle's fourth-quarter earnings confirmed our view that the company is focusing on free cash flow generation over lithium volume growth amid the decline in lithium prices. As the company cuts operating expenses, this should support profits amid lower lithium prices. As Albemarle plans to cut capital expenditures and optimize working capital, this should support higher cash flow generation in 2024. Management's market commentary also confirms our view that growing demand and slowing supply will lead to prices rising in 2024. Having updated our model to incorporate fourth-quarter results, we maintain our $300 per share fair value estimate. Our narrow moat rating is also unchanged.

Price vs Fair Value

ALB is trading at a 60% discount.
Price
$120.65
Fair Value
$385.00
Uncertainty
High
1-Star Price
$458.00
5-Star Price
$292.00
Economic Moat
Dzlgt
Capital Allocation
Kxtwpdvl

Bulls Say, Bears Say

Bulls

Albemarle has top-tier lithium assets through its brine operations in Chile and spodumene hard-rock operations in Western Australia, which are among the lowest-cost sources of lithium production globally.

Bears

Lithium prices will fall if new supply comes online faster than demand, which will weigh on profitability. Albemarle's plans to increase its lithium production capacity will prove value-destructive in the wake of lower prices.

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News

Trading Information

Previous Close Price
$118.18
Day Range
$115.92122.05
52-Week Range
$108.39263.25
Bid/Ask
$120.40 / $120.98
Market Cap
$14.16 Bil
Volume/Avg
2.8 Mil / 3.2 Mil

Key Statistics

Price/Earnings (Normalized)
3.94
Price/Sales
1.40
Dividend Yield (Trailing)
1.33%
Dividend Yield (Forward)
1.33%
Total Yield
1.33%

Company Profile

Albemarle is one of the world's largest lithium producers. In the lithium industry, the majority of demand comes from batteries, where lithium is used as the energy storage material, particularly in electric vehicles. Albemarle is a fully integrated lithium producer. Its upstream resources include salt brine deposits in Chile and the U.S. and two hard rock mines in Australia, both of which are joint ventures. The company operates lithium refining plants in Chile, the U.S., Australia, and China. Albemarle is a global leader in the production of bromine, used in flame retardants. It is also a major producer of oil refining catalysts.
Sector
Basic Materials
Industry
Specialty Chemicals
Stock Style Box
Mid Core
Total Number of Employees
9,000

Competitors

Valuation

Metric
ALB
ALTM
SQM
Price/Earnings (Normalized)
3.945.573.87
Price/Book Value
1.431.122.20
Price/Sales
1.402.471.24
Price/Cash Flow
4.745.287.46
Price/Earnings
ALB
ALTM
SQM

Financial Strength

Metric
ALB
ALTM
SQM
Quick Ratio
0.771.901.52
Current Ratio
1.473.462.28
Interest Coverage
2.7140.21
Quick Ratio
ALB
ALTM
SQM

Profitability

Metric
ALB
ALTM
SQM
Return on Assets (Normalized)
14.67%18.77%27.67%
Return on Equity (Normalized)
28.28%26.41%59.29%
Return on Invested Capital (Normalized)
20.38%22.73%36.36%
Return on Assets
ALB
ALTM
SQM
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SQM
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