Fundamental Facts for Albemarle Investors

It hasn't been a great evening session for Albemarle investors, who have watched their shares sink by -2.0% to a price of $207.99. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 20.49 and an average price to book (P/B) ratio of 3.78. In contrast, Albemarle has a trailing 12 month P/E ratio of 6.7 and a P/B ratio of 2.65.

Albemarle's PEG ratio is 7.79, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:

2020-04-15 2021-02-19 2022-02-22 2023-02-15
Revenue (MM) $3,589 $3,129 $3,328 $7,320
Gross Margins 35.0% 31.8% 30.0% 42.0%
Operating Margins 18.6% 16.2% 15.1% 33.9%
Net Margins 14.86% 12.01% 3.72% 36.75%
Net Income (MM) $533 $376 $124 $2,690
Net Interest Expense (MM) -$58 -$73 -$61 -$123
Depreciation & Amort. (MM) -$213 -$232 -$254 -$301
Earnings Per Share $5.02 $3.52 $1.06 $31.2
EPS Growth n/a -29.88% -69.89% 2843.4%
Diluted Shares (MM) 106 107 117 117
Free Cash Flow (MM) $1,561 $1,649 $1,298 $3,169
Capital Expenditures (MM) -$841 -$850 -$954 -$1,262
Net Current Assets (MM) -$3,542 -$3,776 -$3,175 -$2,079
Current Ratio 1.58 1.22 1.06 1.89
Long Term Debt (MM) $2,863 $2,767 $2,004 $3,215
Net Debt / EBITDA 3.4 4.51 4.77 0.63

Albemarle benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and wider gross margins than its peer group. The company's financial statements show decent operating margins with a positive growth rate and consistent free cash flow. However, the firm has a highly leveraged balance sheet. Finally, we note that Albemarle has a decent current ratio.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.