How Does Albemarle Stack Up After Recent 12% Rally in 2025?

So, you’re trying to decide what to do with Albemarle stock. Is now the time to buy, hold, or pass entirely? It’s a fair question with all the movement this name has seen. Over the past week, Albemarle’s share price jumped 11.7%, making up ground lost earlier this year. In 2024 so far, the stock is up 6.2%. But if you zoom out further, the picture gets more complicated. Albemarle has edged up a modest 0.9% over five years but is still down 7.7% in the last year and a dramatic 65.4% over the last three years.

What’s driving these ups and downs? Much of it comes back to market sentiment and shifting expectations for the lithium industry, especially as battery demand and global electrification trends catch Wall Street’s attention. At the same time, changing risk perceptions have impacted how investors are weighing Albemarle’s long-term growth story against volatility in raw material prices and regulatory landscapes. Still, all eyes are on whether the recent rally signals the start of a broader turnaround or just a bump on a longer road.

If you’re focusing on value, Albemarle earns a valuation score of 2, meaning it looks undervalued on 2 out of 6 key checks we use to assess a company. In the next section, we will break down which of the major valuation methods point to opportunity, where the stock still looks pricey, and tease out an even sharper approach to understanding Albemarle’s true worth.

Albemarle scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Albemarle Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's worth by projecting its future free cash flows and discounting them back to their present value. In Albemarle's case, the DCF uses a two-stage model that factors in both analyst forecasts and longer-term projections to assess the company’s true valuation in today’s dollars.

Currently, Albemarle’s last twelve months of free cash flow sits at a loss of $330 million. However, projections suggest that by 2027, free cash flow should rebound to about $302 million, and may rise to approximately $1.04 billion by 2035. Early years are guided by analyst consensus, while estimates past five years come from industry extrapolation and internal modeling. All figures are reported in US dollars.

Based on these future cash flows and using the DCF framework, Albemarle’s estimated intrinsic value is $119.64 per share. This figure suggests a 24.3% discount to the current share price, indicating that Albemarle stock is undervalued at today's levels.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Albemarle.

Our Discounted Cash Flow (DCF) analysis suggests Albemarle is undervalued by 24.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Albemarle Price vs Sales

For companies like Albemarle in transitional or growth phases, the Price-to-Sales (P/S) ratio is especially useful. Since profits can swing with commodity cycles or high capital investment, measuring value against total sales helps cut through noisy earnings and present a clearer view of how the market prices actual business activity.

Growth expectations and risk tolerance play big roles in what counts as a "normal" or "fair" P/S ratio. Investors typically pay a higher multiple for strong future growth and dependable earnings, while more volatile or slower-growing companies warrant a lower ratio.

Albemarle currently trades at a P/S ratio of 2.13x. This is notably higher than both the Chemicals industry average of 1.17x and its peer group’s 1.74x. On the surface, this could imply the company’s shares are priced on the expensive side compared to its rivals and sector.

However, Simply Wall St’s Fair Ratio for Albemarle is 1.22x. This proprietary benchmark stands out because it factors in not just peer and industry comparisons, but also Albemarle’s unique growth profile, profit margins, size, and risk. By weaving in these elements, the Fair Ratio provides a more customized yardstick, making it more relevant than a one-size-fits-all industry metric.

Since Albemarle’s current P/S (2.13x) is well above its Fair Ratio (1.22x), this suggests the stock is currently overvalued based on this approach.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Albemarle Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple but powerful tool that lets you connect the story you believe about a company, such as where its revenues, earnings, or margins are headed, to a clear financial forecast and, ultimately, to a personal fair value estimate.

Unlike traditional number-crunching, Narratives put your unique perspective front and center, allowing you to test your own scenarios and see in real time if the current price aligns with your expectations. On Simply Wall St’s Community page, used by millions of investors, you can create, view, and compare Narratives to get a sense of where others see value or risk emerging as new information, news, or earnings are released.

Narratives update dynamically with each fresh data point, making them a living reflection of the market’s collective thinking and your own outlook. For example, some investors build bullish Narratives around aggressive cost savings and long-term policy tailwinds, targeting a fair value of $200 per share, while the most conservative see price targets as low as $58, reflecting persistent industry uncertainty.

Do you think there's more to the story for Albemarle? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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