A month has gone by since the last earnings report for Element Solutions (ESI). Shares have added about 0.8% in that time frame, underperforming 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? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Element Solutions Inc. before we dive into how investors and analysts have reacted as of late.
Element Solutions Tops Earnings and Revenue Estimates in Q1
Element Solutions recorded earnings of 23 cents per share for the first quarter of 2026 compared with 40 cents in the year-ago quarter. Reported net income was $56 million, down 43% year over year, primarily due to a gain on the Graphics Solutions divestiture in the prior-year period.
Barring one-time items, earnings were 41 cents per share, up from 34 cents in the year-ago quarter. The figure beat the Zacks Consensus Estimate of 38 cents.
The company generated net sales of $840 million, up 41% year over year from $593.7 million. The figure beat the Zacks Consensus Estimate of $744.4 million. Organic net sales rose 10%.
Element Solutions benefited from strong momentum in its Electronics business, aided by robust demand tied to AI infrastructure, high-performance electronics, advanced packaging and thermal management applications. Acquisitions also contributed to reported growth in the quarter.
Segment Highlights
Net sales in the Electronics segment rose 61% year over year to $633.5 million in the reported quarter. The figure beat the consensus estimate of $532 million. Organic net sales increased 15%. Adjusted EBITDA for the segment increased 34% year over year to $119.1 million.
In the Specialties segment, net sales increased 4% year over year to $206.5 million. Organic net sales rose 1%. The figure missed the consensus estimate of $207 million. Adjusted EBITDA for the segment rose 9% year over year to $43.2 million.
Financial Position
Element Solutions ended the quarter with cash and cash equivalents of $177.3 million, down from $626.5 million at the end of 2025. Debt was $2,058.7 million at the end of the quarter compared with $1,625.9 million as of Dec. 31, 2025.
Cash used in operating activities was $66.6 million against cash provided by operating activities of $26 million in the year-ago quarter. Free cash flow was negative $74.2 million against a positive free cash flow of $30.1 million in the prior-year quarter.
Outlook
The company now expects full-year 2026 adjusted EBITDA in the range of $665 million to $685 million, up from its earlier outlook of $650 million to $670 million. For the second quarter of 2026, ESI expects adjusted EBITDA between $155 million and $170 million.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Element Solutions has a poor Growth Score of F, a score with the same score on the momentum front. Charting a somewhat similar path, the stock has a score 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Element Solutions has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Element Solutions Inc. (ESI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).