ALB, Albemarle Corporation
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- A capital-intensive business, run on heavy physical assets that have to be kept working.
- Situation
- Unprofitable growth. no operating profit yet, judge it on revenue growth, gross-margin trajectory, cash burn and runway, never on an earnings multiple. Distress / turnaround. thin interest coverage or cash-burning operations against real debt, the first questions are liquidity and the maturity wall, not growth. Cyclical. margins collapse repeatedly across the cycle, a single year misleads; look at normalized, through-cycle earnings and the balance sheet at the trough.
- What moves the needle
- How hard the assets work, and what the inputs cost. What decides it: utilization, how much of the capex merely keeps the assets running, and what a downturn does to a heavy fixed-cost base.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median 7%, above 15% in 2 of 10 years). Owner earnings, the cash-based check, have been thin too. The cycle and the balance sheet decide this one, so weigh the worst year against the median, and read the 10-K.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →83% of revenue comes from outside the United States.
- China39%$2.0B
- Other21%$1.1B
- United States17%$890M
- South Korea15%$790M
- Japan7%$360M
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $2.7B | $3.1B | $3.4B | $3.6B | $3.1B | $3.3B | $7.3B | $9.6B | $5.4B | $5.1B | $5.5B |
| Operating marginOp. mgn | 22.4% | 18.6% | 27.0% | 18.6% | 16.2% | 24.0% | 33.7% | 2.6% | −33.0% | −7.1% | −2.8% |
| Net incomeNet inc. | $644M | $55M | $694M | $533M | $376M | $124M | $2.7B | $1.6B | ($1.2B) | ($511M) | ($233M) |
| EPS (diluted)EPS | $5.68 | $0.49 | $6.34 | $5.02 | $3.52 | $1.06 | $22.84 | $13.36 | $-10.04 | $-4.34 | $-1.96 |
| Owner earningsOwner earn. | $539M | ($14M) | ($154M) | ($132M) | ($52M) | ($609M) | $646M | ($828M) | ($993M) | $692M | $575M |
| ROICROIC | 13% | 7% | 16% | 9% | 6% | 8% | 19% | 1% | -10% | -2% | -1% |
| CapexCapex | $197M | $318M | $700M | $852M | $850M | $954M | $1.3B | $2.2B | $1.7B | $590M | $506M |
| Capex / revenueCapex/rev | 7.3% | 10.3% | 20.7% | 23.7% | 27.2% | 28.7% | 17.2% | 22.4% | 31.3% | 11.5% | 9.2% |
| Capex vs depreciationCapex/dep | 0.87× | 1.61× | 3.49× | 3.99× | 3.67× | 3.75× | 4.19× | 5.01× | 2.85× | 0.90× | 0.77× |
| Total debtDebt | $2.4B | $1.8B | $1.7B | $3.1B | $3.6B | $2.4B | $3.2B | $4.2B | $3.5B | $3.2B | $3.6B |
| Cash & investmentsCash+inv | $2.3B | $1.2B | $589M | $647M | $37M | $37M | $40M | $207M | $61M | $64M | $1.2B |
| Net debt / (cash)Net debt | $72M | $669M | $1.1B | $2.4B | $3.5B | $2.4B | $3.2B | $4.0B | $3.5B | $3.1B | $2.4B |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? -1.8×Does not cover its interestOperating income ($367M) ÷ interest expense $208M
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
- Debt against an operating lossTotal debt $3.9B · operating income ($367M)
There's debt but no operating profit to measure it against, understand that combination before anything else about the company.
- Debt, net of cash $3.2BNet debtCash $613M − debt $3.9B
Netting $613M of cash and short-term investments against $3.9B of debt leaves $3.2B owed. It also holds $64M in longer-dated marketable securities; counting those, it sits at $3.2B of net debt. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- TightDSO 42 + DIO 96 − DPO 125 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- Below averageNOPAT ($290M) ÷ invested capital $12.8B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $692M = operating cash $1.3B − capex $590M
What an owner could take out without starving the business. That's 13% of revenue. Treating stock comp as the real expense it is (less $40M of SBC) leaves $652M. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Loss, but cash-generativeNet income ($511M) · cash from operations $1.3B
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.
How is the cash used?
- Reinvests most of itDividends + buybacks $191M ÷ Owner Earnings $692M
Of $692M Owner Earnings, $191M (28%) went back to shareholders, $191M dividends, $0 buybacks. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.90×MaintainingCapex $590M ÷ depreciation $659M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 8 of 10
Lost money in 2 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 2 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 22% (FY2016) → −7% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC −11%
Reinvested capital earned a negative return, the business spent money to shrink its own economics.
- Worst year 2024 · −33.0% op. margin
Operations went underwater in 2024, understand why before trusting the good years.
- Share count +0.4%/yr
Roughly flat share count, little dilution, little buyback.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $8.7B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a reinvestor, most operating cash is plowed back into the business.
- Reinvested$9.6B · 110%
- Dividends$1.7B · 19%
- Buybacks$750M · 9%
It reinvested $9.6B (110%) back into the business and returned $2.4B (28%) to owners, $1.7B in dividends, $750M in buybacks. Total debt rose $1.2B across the span. It returned and reinvested more than it generated, the gap was covered by debt or existing cash.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$40M
The slice of the business handed to employees in shares this year, 1% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $5.1B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity PassCurrent ratio ≥ 2× · 2.23×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $3.9B vs $2.2B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability MissA profit every year (10-yr record) · 2 loss years
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −108%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $-4.34/share and book value $81.02/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Albemarle Corporation has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $575M on 119M diluted shares; net debt $2.4B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationRisk Factors
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“During the years ended December 31, 2025 and 2024, no customer represented greater than 10% of the Company's consolidated net sales.”
From the recordRevenue exposed (TTM)$5.5B - Pricing power & competitionMD&A
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“We compete against a number of highly competitive global chemical producers.”
From the recordOperating margin−2.8% now (TTM), off a 33.7% peak (FY2022) - Supplier & input dependenceMD&A
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“We work with numerous independent suppliers to mitigate lack of availability from a single supplier, however in some cases products with limited numbers of suppliers may become difficult to obtain.”
From the recordGross-margin cushion (TTM)18% - Concentrated dependenceMD&A
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Our businesses are dependent on the availability and responsible management of natural resources.”
From the recordOwner-earnings margin at stake (TTM)10% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“The amended 2022 Credit Agreement subjects the Company to two financial covenants, as well as customary affirmative and negative covenants.”
From the recordBalance sheet (TTM)$3.2B net debt · operating profit doesn't cover interest - Litigation & contingenciesBusiness
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“We could face patent infringement claims from our competitors or others alleging that our processes or products infringe on their proprietary technologies.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandMD&A
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“Historically, cyclical or secular industry downturns have resulted in diminished demand for our products, excess manufacturing capacity and lower average selling prices, and we may experience similar problems in the future.”
From the recordWorst year on record−33.0% operating margin (FY2024)
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “We believe our disciplined cost reduction efforts and ongoing productivity improvements, among other factors, position us well to take advantage of strengthening economic conditions as they occur, while softening the negative impact of challenging global economic environments. 2025 Highlights In Jan…”
- “Based on the transaction prices in these agreements, we recorded a $181.1 million non-cash goodwill impairment charge in the third quarter of 2025, representing goodwill associated with the Refining Solutions reporting unit, and a separate long-lived asset impairment of $245.6 million in the fourth …”
- “In addition, we work with local communities, regulatory agencies and wildlife organizations to preserve and restore land and biodiversity before, during and after all operations commence. 8 Albemarle Corporation and Subsidiaries Recent Acquisitions, Joint Ventures and Divestitures The following is a…”
- “These include, among others, the inability to find potential buyers on favorable terms, disruption to our business, diversion of resources and management attention from other business concerns, loss of key employees, renegotiation or termination of key business relationships, retention of certain li…”
- “The mark-to-market actuarial loss in 2025 was primarily attributable to a decrease in the weighted-average discount rate to 5.43 % from 5.65 % for our U.S. pension plans and postretirement benefit to reflect market conditions as of the December 31, 2025 measurement date, which was partially offset b…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Chemicals
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| DOWDow Inc. | $40.0B | 6% | -6.7% | -7% | -4% |
| DDDupont DE Nemours, Inc. | $6.8B | 35% | -5.3% | -1% | 4% |
| ALBAlbemarle Corporation | $5.1B | 13% | -7.1% | -2% | 13% |