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Element Solutions (ESI) Up 3.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Element Solutions (ESI - Free Report) . Shares have added about 3.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Element Solutions due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Element Solutions’ Earnings & Revenues Surpass Estimates in Q3

Element Solutions recorded third-quarter 2024 earnings (as reported) of 17 cents per share. This compares favorably with a loss of 13 cents in the year-ago quarter. Adjusted earnings per share came in at 39 cents in the quarter, beating the Zacks Consensus Estimate of 38 cents.

The company generated net sales of $645 million, up 7.6% year over year. The figure beat the Zacks Consensus Estimate of $618.8 million. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin declined 30 basis points to 22.1%.

Segment Highlights

Net sales in the Electronics segment increased 14% year over year to $419.1 million in the reported quarter, with organic net sales up 9% from the previous year's reported figure. The figure beat the consensus estimate of $396.9 million.

In the Industrial & Specialty segment, net sales fell 3% year over year to $225.9 million, with organic net sales remaining flat. The figure topped the consensus of $221.8 million.

Financial Position

Element Solutions ended the quarter with cash and cash equivalents of $376 million, up 14% year over year. Long-term debt was $1,914.7 million at the end of the quarter, down 5.5%.

Cash from operating activities was $98.5 million in the reported quarter.

Outlook

The company expects adjusted EBITDA for full-year 2024 to be between $535 million and $540 million. The company anticipates free cash flow of $280 million to $300 million for the year.

 

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months.

VGM Scores

Currently, Element Solutions has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Element Solutions has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Element Solutions belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Sherwin-Williams (SHW - Free Report) , has gained 9.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.

Sherwin-Williams reported revenues of $6.16 billion in the last reported quarter, representing a year-over-year change of +0.8%. EPS of $3.37 for the same period compares with $3.20 a year ago.

For the current quarter, Sherwin-Williams is expected to post earnings of $2.08 per share, indicating a change of +14.9% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Sherwin-Williams has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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