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Albemarle Hits New 52-Week High: What's Driving the Stock?

Shares of premier specialty chemical company, Albemarle CorporationALB , scaled a new 52-week high of $114.29 yesterday, before pulling back to close the day at $113.60.

Albemarle is a leading producer of highly-engineered specialty chemicals that has a market capitalization of roughly $12.5 billion. The average volume of shares traded by the company in the past three months is 981,437.

Let's find out what are the driving factors behind this latest rally.

Strong Q1 Performance

Albemarle recorded adjusted earnings of $1.05 per share in the first quarter of 2017, topping the Zacks Consensus Estimate of 95 cents.

Revenues were $722.1 million in the first quarter, which beat the Zacks Consensus Estimate of $678.7 million.

Revenues in the first quarter rose on the back of favorable impact of higher sales volume in three reportable segments, more than offsetting the impact of divestitures of specialty chemicals business, minerals-based flame retardants and currency exchange.

Price Performance

The shares of Albemarle have been performing well of late. The company has significantly outperformed the Zacks categorized Chemicals-Diversified industry over the past three months, partly reflecting its better than expected first quarter performance and its strategic growth initiatives.

Albemarle's shares have gained around 8.2% over this period, as against the roughly 0.1% loss recorded by the industry.

Earnings Surprise

Albemarle has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of around 9%.

Rising Estimates

The current quarter estimates for Albemarle have been going up lately. The stock has witnessed seven upward and one downward estimate revisions in the past one month. This positive outlook helped to lift current quarter earnings estimate by 5.8% to $1.09 per share.

Strong Growth Prospects

Albemarle remains focused on strengthening its lithium business and is well placed to leverage strong expected growth in the battery-grade lithium market. The company's Talison joint venture in Australia has approved the expansion of lithium concentrate production at its Greenbushes mine. The expansion will double the lithium carbonate equivalent capacity at Greenbushes from 80,000 metric tons per year to more than 160,000 metric tons.

Cost-Cutting Actions

Albemarle is also selling non-core businesses and assets to boost growth opportunities and focus on its key businesses. As part of this move, the company has sold its Chemetall Surface Treatment unit to German chemical giant BASF BASFY for around $3.2 billion. Albemarle also completed the divestiture of the tribotecc metal sulfides business to Treibacher Industrie AG, as a strategic plan to focus on its core bromine, lithium, catalysts and surface treatment businesses.

Acquisitions

The acquisition 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 to reach closer to its goal of capturing 50% growth in this industry.

Outlook

Albemarle in its first-quarter call revealed that it is optimistic about 2017 owing to a strong start in Lithium and Bromine Specialties. Concurrently, the company issued a favorable outlook for both businesses. The company raised sales and earnings outlook for 2017. It now expects net sales in the band of $2.9-$3.05 billion (up from $2.8-$2.95 billion expected earlier) and adjusted earnings per share of between $4.20 and $4.40 (up from $4.00-$4.25 per share) for 2017.

Albemarle Corporation Price and Consensus

Albemarle Corporation Price and Consensus | Albemarle Corporation Quote

Zacks Rank & Key Picks

Albemarle currently carries a Zacks Rank #3 (Hold).

Some top ranked companies in the chemical space include The Chemours Company CC and Kronos Worldwide, Inc. KRO , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Chemours has expected long-term growth rate of 15.5%.

Kronos has expected long-term growth rate of 5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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