Element Solutions (ESI) AI Stock Analysis

Compare

203 Followers

Top Page

Element Solutions

(NYSE:ESI)

Rating:71Outperform

Price Target:

$23.50

▲( 9.97% Upside)

Element Solutions scores well due to its strong financial health and positive earnings call insights, particularly the growth in the electronics segment. Technical analysis indicates a mild bearish trend, and valuation suggests fair pricing. The company's ability to navigate challenges and maintain a stable outlook supports a solid overall score.

Positive Factors

Earnings

ESI had a strong start to the year with earnings trending ahead of expectations.

Financial Performance

ESI delivered $128mm EBITDA in 1Q beating Street's $125mm, with margins at 26.1%, up 50bps Y/Y.

Negative Factors

Outlook

The outlook remains uncertain, driving forecasts slightly lower.

Price Target

The price target was lowered from $28 to $24, reflecting a more conservative outlook due to uncertainties in trade policies.

Element Solutions (ESI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$5.38B

Dividend Yield1.44%

Average Volume (3M)3.05M

Price to Earnings (P/E)18.8

Beta (1Y)1.25

Revenue Growth6.08%

EPS Growth117.61%

CountryUS

Employees5,300

SectorBasic Materials

Sector Strength60

IndustryChemicals - Specialty

Share Statistics

EPS (TTM)0.34

Shares Outstanding242,504,070

10 Day Avg. Volume1,739,929

30 Day Avg. Volume3,054,987

Financial Highlights & Ratios

PEG Ratio1.08

Price to Book (P/B)2.04

Price to Sales (P/S)0.00

P/FCF Ratio18.92

Enterprise Value/Market Cap1.16

Enterprise Value/Revenue0.65

Enterprise Value/Gross Profit6.01

Enterprise Value/Ebitda3.20

Forecast

1Y Price Target

$26.63

Price Target Upside24.61% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering8

Element Solutions Business Overview & Revenue Model

Company DescriptionElement Solutions Inc (ESI) is a global specialty chemicals company that operates in various sectors, including electronics, industrials, and consumer goods. The company's core products and services include high-performance coatings, surface finishing solutions, and other specialty chemicals that enhance the performance and durability of materials and components used in a wide range of industries. ESI is committed to delivering innovative solutions that address the evolving needs of its customers worldwide.

How the Company Makes MoneyElement Solutions Inc generates revenue primarily through the sale of its specialty chemical products and solutions to a diverse customer base across multiple industries. The company's key revenue streams include electronics solutions, which provide advanced materials used in the manufacturing of electronic devices, and industrial solutions, which offer surface treatment chemicals for various applications. Additionally, ESI benefits from strategic partnerships and long-term contracts with leading manufacturers and suppliers, ensuring a steady demand for its products. The company's focus on innovation and sustainability also plays a significant role in its ability to attract and retain customers, contributing to its overall financial performance.

Element Solutions Financial Statement Overview

Summary

Element Solutions exhibits strong financial health with solid profitability margins and a stable balance sheet. Revenue growth is modest, but the company maintains efficiency in operations and cash flow generation. The balance sheet is well-structured with moderate leverage, and the company effectively converts earnings into cash.

Income Statement

Positive

Element Solutions shows a strong gross profit margin of 42.1% and a net profit margin of 11.6% for TTM, indicating efficient cost management and profitability. The revenue growth rate is modest at 0.76% TTM, reflecting stable yet slow growth. EBIT and EBITDA margins are at 14.1% and 18.7% respectively, which are healthy for the specialty chemicals industry, suggesting robust operational efficiency.

Balance Sheet

Positive

The debt-to-equity ratio stands at 0.64, indicating a moderate level of leverage, which is generally manageable. Return on equity (ROE) is 11.4% TTM, showcasing reasonable profitability from shareholders' equity. The equity ratio is 52.6%, suggesting a solid capital structure with a good proportion of assets financed by equity.

Cash Flow

Positive

Operating cash flow to net income ratio is 1.16, highlighting strong cash generation from operations relative to accounting profits. The free cash flow to net income ratio is 0.95, reflecting effective cash conversion. However, free cash flow growth has been slightly negative, indicating challenges in growing free cash flow amidst capital expenditure.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.48B	2.46B	2.33B	2.55B	2.40B	1.85B
	Gross Profit
1.04B	1.04B	918.50M	952.70M	960.80M	786.00M
	EBIT
350.30M	343.90M	173.60M	325.30M	299.90M	181.00M
	EBITDA
552.90M	501.60M	345.10M	496.10M	475.50M	305.70M
	Net Income Common Stockholders
286.20M	244.20M	118.10M	187.20M	203.30M	75.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
286.30M	359.40M	289.30M	265.60M	330.10M	291.90M
	Total Assets
4.91B	4.87B	4.97B	4.90B	5.14B	4.48B
	Total Debt
1.93B	1.84B	1.95B	1.90B	1.91B	1.52B
	Net Debt
1.64B	1.48B	1.66B	1.63B	1.58B	1.22B
	Total Liabilities
2.57B	2.48B	2.63B	2.55B	2.64B	2.17B
	Stockholders Equity
2.32B	2.38B	2.33B	2.33B	2.48B	2.32B
Cash Flow		Free Cash Flow
271.50M	293.60M	280.90M	253.50M	279.70M	232.50M
	Operating Cash Flow
331.90M	362.00M	333.60M	301.30M	326.00M	261.30M
	Investing Cash Flow
286.70M	-73.80M	-250.20M	-75.20M	-568.90M	-39.90M
	Financing Cash Flow
-403.30M	-206.60M	-58.70M	-275.60M	290.00M	-123.60M

Element Solutions Technical Analysis

Technical Analysis Sentiment

Negative

Last Price21.37

Price Trends

50DMA

21.69

Negative

100DMA

23.65

Negative

200DMA

25.02

Negative

Market Momentum

MACD

0.33

Negative

RSI

49.41

Neutral

STOCH

49.32

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESI, the sentiment is Negative. The current price of 21.37 is above the 20-day moving average (MA) of 21.33, below the 50-day MA of 21.69, and below the 200-day MA of 25.02, indicating a neutral trend. The MACD of 0.33 indicates Negative momentum. The RSI at 49.41 is Neutral, neither overbought nor oversold. The STOCH value of 49.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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

Overall Rating

UnderperformOutperform

Sector (50)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BCPC	78 Outperform	$5.56B	40.82	11.94%	0.51%	3.76%	18.06%
AXTA	77 Outperform	$6.96B	15.32	23.59%	―	0.96%	82.78%
AVNT	72 Outperform	$3.42B	34.52	4.32%	2.83%	3.58%	-5.17%
ESI	71 Outperform	$5.38B	18.81	11.75%	1.44%	6.08%	117.61%
CBT	65 Neutral	$4.07B	9.79	30.57%	2.28%	-0.05%	-2.76%
FUL	65 Neutral	$3.07B	28.57	6.35%	1.60%	0.99%	-27.62%
Sector *	50 Neutral	$2.00B	-1.02	-21.34%	3.70%	2.00%	-30.65%

* Basic Materials Sector Average

Performance Comparison

ESI

Element Solutions

21.37

-2.22

-9.41%

BCPC

Balchem

168.30

15.35

10.04%

CBT

Cabot

73.37

-25.72

-25.96%

FUL

H.B. Fuller Company

54.67

-23.74

-30.28%

AVNT

Avient

36.02

-7.34

-16.93%

AXTA

Axalta Coating Systems

31.29

-3.62

-10.37%

Element Solutions Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 11.19%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

Element Solutions Inc. reported a strong start to 2025 with significant growth in its electronics segment and robust balance sheet improvements. However, challenges remained in the industrial segment, and currency fluctuations alongside higher metal prices impacted margins. Despite these challenges, the company's strategic growth initiatives and ability to navigate uncertainties reflect a balanced outlook.

Q1-2025 Updates

Positive Updates

Strong Start to 2025

Element Solutions started 2025 strong with mid-single digit organic growth despite challenges in automotive supply chains and Western smartphone markets.

Electronics Business Growth

The electronics segment grew 10% organically, driven by strong performance in semiconductor and power electronics technologies.

Wafer-Level Packaging Growth

Sales from wafer-level packaging products grew more than 20% due to high bandwidth memory applications and strong customer order patterns.

Adjusted EBITDA Growth

Adjusted EBITDA grew 5% year over year to $128 million, surpassing guidance targets, with a 9% growth in the electronics segment.

Balance Sheet Strength

The company's net leverage ratio is at its lowest level in history at 2.1 times, with a fully fixed capital structure and no debt maturities until 2028.

Negative Updates

Industrial and Specialty Segment Decline

Industrial and specialty organic net sales declined 2%, with a 1% decline in the core industrial business, driven by volume decreases in Europe.

Impact of Higher Metal Prices on Margins

Adjusted EBITDA margin declined roughly 30 basis points year over year due to a 70 basis point headwind from higher pass-through metal prices.

Currency Impact on Financials

Currency fluctuations negatively impacted total company net sales by roughly 3% and adjusted EBITDA by $5 million in the first quarter.

Offshore Business Timing Delays

Offshore's year-over-year sales decline was due to timing delays for large orders, impacting growth expectations for the first half of the year.

Company Guidance

In the first quarter of 2025, Element Solutions Inc. reported a strong start with an organic sales growth of 5% and a constant currency adjusted EBITDA increase of 5% year over year, reaching $128 million—exceeding their guidance target. The electronics segment saw a notable 10% organic growth, driven by advancements in fast-growing markets like AI, advanced packaging, and data centers, alongside improvements in the Asian consumer electronics market. The wafer-level packaging products surged over 20%, particularly due to high bandwidth memory applications. Adjusted EBITDA margins slightly declined by 30 basis points year over year, impacted by higher pass-through metal prices, but excluding $100 million in pass-through sales, margins improved by 50 basis points to 26%. Despite a 3% negative currency impact on net sales, the company expects currency to become a tailwind in Q2. Element Solutions maintains its full-year adjusted EBITDA guidance between $520 million and $540 million, anticipating consistent demand and a recovery in industrial and specialty segments in the latter half of the year.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.