Is Albemarle Stock a Value Opportunity?

Lithium miner (NYSE: ALB) has struggled since hitting an all-time high in 2022, with shares down about 64% since. A primary cause of the decline is likely profit-taking after an intense run-up during the pandemic, but slowing adoption of electric vehicles (EVs) and reduced expectations for future EV demand are also significant factors.

Multiple automakers -- including Ford Motor Company (NYSE: F), General Motors (NYSE: GM), Volkswagen (OTC: VWAP.Y), and Jaguar -- have pulled back on plans to electrify their fleets. For Albemarle, which generates 74% of its revenue from the production of lithium compounds used in battery production, this development has turned a long-running tailwind into an unexpected headwind. However, the market is overlooking the company's solid financial performance.

While the news and market sentiment are bearish right now, Albemarle has consistently turned a profit and paid a dividend. For 2023, the company reported net income of $1.6 billion, or $13.36 per diluted share. Gross profit declined year over year due to an increase in cost of goods sold. The company reported a $604 million charge due to a reduction in the market price of lithium products. On the positive side, revenue rose by more than $2 billion. Despite slowing demand, Albemarle is growing its top line; any future increases in the market price for lithium products will only boost its margins and profits.

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Source Fool.com