Weekly Equity Idea Highlight - 2017 12 20
Valuations & Market ExpectationsALB is trading at the high end of historical valuations, with a 23.2x Uniform P/E (V/E'), and on an initial glance, market expectations for ALB appear elevated. The market is expecting ALB to see 5% Uniform Asset growth going forward, not out of line with history, but to also see ROA' plateau around 15%-16% levels going forward, in line with 2015 peak ROA'. However, when put in context of what the market is expecting for ALB's Uniform EPS (EPS') growth, and in the context of the macro factors driving ALB, expectations do not appear excessive, and appear low.
ALB's EPS' growth is forecast to be 21%+ over the next several years, on the other hand, the market is only currently pricing them to see 12% EPS' growth going forward, highlighting low market expectations. ALB also has strong macro tailwinds and favorably positioning that is likely to enable them to see stronger growth and sustained high ROA', spelling sustained elevated EPS' growth.
Albemarle is a global developer, manufacturer and marketer of chemicals across a range of end markets including energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, crop protection and custom chemistry services. The company's segments include: Lithium, which develops and manufactures a range of basic lithium compounds and lithium specialties and reagents; Bromine Specialties, which includes products used in fire safety solutions and other chemicals applications; and Catalysts, which includes Clean Fuels Technologies, fluidized catalytic cracking catalysts and additives, and performance catalyst solutions.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.