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Element Solutions Inc (ESI)
NYSE:ESI
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Element Solutions
(NYSE:ESI)
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Rating:65Neutral
Price Target:
$32.00
▲(8.92% Upside)
Element Solutions' overall stock score reflects strong financial performance and a positive earnings call, indicating robust growth prospects and strategic initiatives. However, technical indicators suggest bearish momentum, and valuation metrics indicate moderate overvaluation, which tempers the overall score.
Positive Factors
Electronics Segment Growth
Consistent growth in the electronics segment indicates strong demand and market expansion, reinforcing Element Solutions' position in a key revenue-generating area.
Micromax Acquisition
The acquisition of Micromax is expected to enhance earnings and expand market capabilities, supporting long-term strategic growth and competitive positioning.
Industrial Segment Margin Improvement
Margin improvements in the industrial segment demonstrate operational efficiency and potential for sustained profitability, enhancing overall financial health.
Negative Factors
Decline in Power Electronics Sales
The decline in power electronics sales due to a weaker EV market poses a challenge, potentially affecting revenue from a growing industry segment.
Soft Macroeconomic Backdrop
A soft macroeconomic environment can hinder growth prospects and demand in key markets, impacting Element Solutions' revenue and profitability.
Decline in Free Cash Flow Growth
The significant decline in free cash flow growth raises concerns about cash generation and financial flexibility, crucial for sustaining long-term operations and investments.
Element Solutions (ESI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.80B
Dividend Yield1.25%
Average Volume (3M)1.92M
Price to Earnings (P/E)28.5
Beta (1Y)1.29
Revenue Growth3.87%
EPS Growth-10.30%
CountryUS
Employees5,300
SectorBasic Materials
Sector Strength58
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)0.41
Shares Outstanding241,999,910
10 Day Avg. Volume1,846,224
30 Day Avg. Volume1,916,858
Financial Highlights & Ratios
PEG Ratio0.24
Price to Book (P/B)2.58
Price to Sales (P/S)2.51
P/FCF Ratio20.97
Enterprise Value/Market Cap1.05
Enterprise Value/Revenue2.86
Enterprise Value/Gross Profit6.80
Enterprise Value/Ebitda15.02
Forecast
1Y Price Target
$33.00Price Target Upside12.32% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)1.71
Revenue Forecast (FY)$2.81B
Element Solutions Business Overview & Revenue Model
Company DescriptionElement Solutions Inc operates as a specialty chemicals company in the United States, China, and internationally. The company operates in two segments, Electronics, and Industrial & Specialty. The Electronics segment researches, formulates, and sells specialty chemicals and materials for various types of electronics hardware products. This segment also supplies solder technologies, fluxes, cleaners, and other attachment materials for the electronics assembly industry; proprietary liquid chemical processes to manufacture printed circuit boards; and advanced copper interconnects, die attachment, wafer bump processes, and photomask technologies for integrated circuit fabrication and semiconductor packaging. It primarily serves mobile communications, computers, automobiles, and aerospace equipment industries. The Industrial & Specialty segment provides industrial solutions, which include chemical systems that protect and decorate metal and plastic surfaces; consumable chemicals that enable printing image transfer on flexible packaging materials; and chemistries used in water-based hydraulic control fluids for offshore energy production applications. It serves aerospace, automotive, construction, consumer electronics, consumer packaged goods, and oil and gas production end markets. The company was formerly known as Platform Specialty Products Corporation and changed its name to Element Solutions Inc in January 2019. Element Solutions Inc was founded in 1785 and is headquartered in Fort Lauderdale, Florida.
How the Company Makes MoneyElement Solutions generates revenue primarily through the sale of its specialty chemical products across multiple sectors. The company operates through two main segments: Electronics and Industrial. In the Electronics segment, ESI provides materials used in semiconductor manufacturing, printed circuit boards, and other electronic components, which are critical for the rapidly growing technology market. The Industrial segment includes a wide range of surface finishing products for automotive, aerospace, and other industrial applications. Key revenue streams for ESI include direct sales to manufacturers, long-term contracts with major clients, and partnerships with industry leaders to develop bespoke solutions. Additionally, the company's emphasis on innovation and sustainability in its product development helps it maintain competitive pricing and attract new business, contributing significantly to its overall earnings.
Element Solutions Earnings Call Summary
Earnings Call Date:Oct 28, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 24, 2026
Earnings Call Sentiment Positive
The earnings call highlighted significant achievements, including record adjusted EBITDA, strong growth in the electronics segment, and strategic acquisition of Micromax. However, challenges such as a decline in power electronics sales due to a weaker EV market and a soft macroeconomic environment were also noted. Overall, the sentiment was positive, with a strong outlook for future growth and financial flexibility.Q3-2025 Updates
Positive Updates
Record Quarterly Adjusted EBITDA
Element Solutions reported its highest quarterly adjusted EBITDA since inception, reaching $147 million, exceeding initial guidance for the quarter.
Micromax Acquisition
Announced the acquisition of Micromax, expected to contribute approximately $40 million of adjusted EBITDA on a full-year basis and be more than 5% accretive to adjusted earnings per share.
Electronics Segment Growth
Electronics segment posted its sixth consecutive quarter of high single-digit organic growth, with 7% driven by strong performance in Circuitry Solutions and semi and assembly segments.
Industrial Segment Margin Improvement
Industrial segment saw meaningful margin improvement with adjusted EBITDA growth of almost 30% excluding the graphics divestiture.
Net Leverage and Financial Flexibility
Element Solutions maintains a net leverage ratio of 1.9x, with expectations to fund the Micromax transaction while keeping leverage below the 3.5x target ceiling.
Negative Updates
Decline in Power Electronics Sales
Power electronics sales were negatively impacted by a weaker EV market, contributing to a year-on-year decline in this segment.
Soft Macroeconomic Backdrop
Faced challenges with a soft macroeconomic environment in Western industrial markets and a weaker EV outlook.
Higher Pass-Through Metal Prices
Adjusted EBITDA margin was negatively impacted by higher pass-through metal prices, despite a 20 basis point improvement year-over-year in constant currency terms.
Company Guidance
During the Element Solutions Third Quarter 2025 Financial Results Conference Call, the company provided a robust outlook for the remainder of the year and beyond, highlighting significant achievements and strategic moves. The company set a record with an adjusted EBITDA of $147 million, surpassing the guidance range of $140 million to $145 million. The Electronics segment experienced its sixth consecutive quarter of high single-digit organic growth, contributing to a projected full-year adjusted EBITDA of $545 million to $550 million. The acquisition of Micromax, expected to close in Q1 2026, is anticipated to be more than 5% accretive to adjusted EPS and contribute approximately $40 million of adjusted EBITDA annually. Additionally, Element Solutions reported an improvement in adjusted EBITDA margin by 100 basis points to 28%, excluding the impact of pass-through metal sales. The company maintained a net leverage ratio of 1.9x, expecting it to rise to approximately 2.5x post-acquisition, comfortably below its long-term target ceiling of 3.5x.Element Solutions Financial Statement Overview
Summary
Element Solutions shows strong revenue growth and profitability, supported by a solid balance sheet with improved leverage. However, the significant decline in free cash flow growth poses a risk to future cash generation. The company should focus on enhancing operational efficiencies and cash flow management to sustain its growth trajectory.Income Statement
Element Solutions has demonstrated strong revenue growth in the TTM period with a 44.6% increase, indicating robust demand and market expansion. The gross profit margin remains healthy at 42%, and the net profit margin is solid at 9.58%. However, there is a slight decline in EBIT and EBITDA margins compared to the previous year, suggesting increased operational costs or pricing pressures.75
Positive
Balance Sheet
The company's debt-to-equity ratio has improved to 0.61 in the TTM period, reflecting better leverage management. Return on equity is stable at 9.4%, indicating efficient use of equity to generate profits. The equity ratio remains strong, suggesting a solid financial foundation, although the total debt level is still significant.70
Positive
Cash Flow
The cash flow analysis shows a decline in free cash flow growth, which dropped by 84.5% in the TTM period, raising concerns about cash generation capabilities. The operating cash flow to net income ratio is healthy at 0.90, indicating good cash conversion, but the free cash flow to net income ratio has slightly decreased, reflecting potential cash flow management challenges.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.50B | 2.46B | 2.33B | 2.55B | 2.40B | 1.85B |
| Gross Profit | 1.05B | 1.04B | 918.50M | 952.70M | 960.80M | 786.00M |
| EBITDA | 475.20M | 501.60M | 345.10M | 496.10M | 475.50M | 305.90M |
| Net Income | 239.40M | 244.20M | 118.10M | 187.20M | 203.30M | 75.70M |
Balance Sheet | ||||||
| Total Assets | 5.05B | 4.87B | 4.97B | 4.90B | 5.14B | 4.48B |
| Cash, Cash Equivalents and Short-Term Investments | 594.30M | 359.40M | 289.30M | 265.60M | 330.10M | 291.90M |
| Total Debt | 1.63B | 1.91B | 2.03B | 1.98B | 1.97B | 1.57B |
| Total Liabilities | 2.38B | 2.48B | 2.63B | 2.55B | 2.64B | 2.17B |
| Stockholders Equity | 2.65B | 2.38B | 2.33B | 2.33B | 2.48B | 2.32B |
Cash Flow | ||||||
| Free Cash Flow | 269.90M | 293.60M | 283.10M | 249.90M | 276.20M | 232.50M |
| Operating Cash Flow | 337.40M | 362.00M | 335.80M | 297.70M | 322.50M | 261.30M |
| Investing Cash Flow | 287.50M | -73.80M | -250.20M | -75.20M | -568.90M | -39.90M |
| Financing Cash Flow | -405.40M | -206.60M | -58.70M | -275.60M | 290.00M | -123.60M |
Element Solutions Technical Analysis
Positive
29.38
Price Trends
26.27
Positive
26.06
Positive
24.06
Positive
Market Momentum
0.73
Negative
71.77
Negative
89.00
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESI, the sentiment is Positive. The current price of 29.38 is above the 20-day moving average (MA) of 26.59, above the 50-day MA of 26.27, and above the 200-day MA of 24.06, indicating a bullish trend. The MACD of 0.73 indicates Negative momentum. The RSI at 71.77 is Negative, neither overbought nor oversold. The STOCH value of 89.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ESI.
Element Solutions Risk Analysis
Element Solutions disclosed 33 risk factors in its most recent earnings report. Element Solutions reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Element Solutions Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $7.05B | 16.12 | 21.75% | ― | -1.83% | 40.64% | |
75 Outperform | $5.18B | 35.02 | 12.06% | 0.61% | 7.55% | 22.43% | |
72 Outperform | $7.90B | 11.55 | 12.24% | 5.33% | -3.33% | -19.59% | |
68 Neutral | $6.67B | 14.99 | 29.23% | 1.59% | -1.11% | 5.15% | |
65 Neutral | $6.80B | 28.47 | 9.40% | 1.25% | 3.87% | -10.30% | |
63 Neutral | $4.08B | 29.38 | 12.31% | 1.70% | 4.25% | 56.51% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% |
* Basic Materials Sector Average
ESI
Element Solutions
29.38
3.42
13.17%
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166.01
3.98
2.46%
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70.23
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650.00
162.66
33.38%
SXT
Sensient Technologies
97.30
23.32
31.52%
AXTA
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33.61
-3.37
-9.11%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.