The Baton Rouge, LA-based company is a developer, manufacturer and marketer of specialty chemicals across a range of end markets.
Recent sharp moves in lithium spot prices have contributed to a recent 21% rally in Albemarle shares since mid-December, the firm said.
"We believe the jump in the highly-illiquid spot market is an incremental positive, insofar as it points in the right direction, but expectations for near-term EPS revisions should not be pegged to the spot market," Jefferies said in an analyst note.
Improving the quality of Albemarle's contracts to improve visibility and underwrite risks associated with investing in new capacity is a priority for the company, the firm noted.
Shares of Albemarle closed up by 1.43% to $56.75 on Monday.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate ALBEMARLE CORP as a Buy with a ratings score of B-. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 18.1%. Since the same quarter one year prior, revenues rose by 40.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $183.72 million or 35.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.58%.
- 42.97% is the gross profit margin for ALBEMARLE CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.22% trails the industry average.
- Even though the current debt-to-equity ratio is 1.22, it is still below the industry average, suggesting that this level of debt is acceptable within the Chemicals industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.70 is weak.
- ALBEMARLE CORP's earnings per share declined by 42.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ALBEMARLE CORP reported lower earnings of $2.56 versus $4.89 in the prior year. This year, the market expects an improvement in earnings ($3.74 versus $2.56).
- You can view the full analysis from the report here: ALB