Arconic's (ARNC) Earnings Top Estimates In Q3, Revenues Lag

Arconic Inc. (NYSE:ARNC) logged profits (as reported) of $95 million or 21 cents per share in third-quarter 2019, down 41% from a profit of $161 million or 32 cents in the prior-year quarter. The bottom line was hurt by non-cash asset impairment charges of $108 million.

Barring one-time items, adjusted earnings per share were 58 cents, up from 32 cents a year ago. The figure topped the Zacks Consensus Estimate of 53 cents.

Arconic recorded revenues of $3,559 million, up around 1% year over year. It missed the Zacks Consensus Estimate of $3,602.4 million.

Organic revenues rose 6% year over year on the back of strong volumes across major markets and favorable pricing.

Arconic Inc. Price, Consensus and EPS Surprise

Arconic Inc. price-consensus-eps-surprise-chart | Arconic Inc. Quote

Segment Highlights

Engineered Products and Forgings (EP&F): Revenues in the division were $1.8 billion, up 7% year over year. Organic revenues in the segment rose 8%, supported by growth in aerospace engines, defense and commercial transportation.

Global Rolled Products (GRP): Revenues in the division fell 4% year over year to $1.8 billion in the quarter. Organic revenues in the segment went up 5%. The division gained from favorable pricing.

Financial Position

Arconic had cash and cash equivalents of $1,321 million at the end of the quarter, down around 14% year over year. Long-term debt fell roughly 22% year over year to $4,905 million.

Cash provided from operations was $52 million in the reported quarter.

Outlook

Arconic provided its updated full-year 2019 guidance. It now expects revenues in the range of $14.15-$14.35 billion, down from its prior view of $14.3-$14.6 billion.

The company raised its adjusted earnings guidance for 2019 to the range of $2.07-$2.11 per share from its earlier expectation of $1.95-$2.05 per share. Moreover, the company continues to expect adjusted free cash flow to be in the band of $700-$800 million for 2019.

Arconic also expects adjusted earnings for the fourth quarter to be in the range of 49-53 cents.

Moreover, Arconic raised the annualized cost reduction commitment to roughly $280 million on a run-rate basis, from its prior expectation of $260 million. It expects to capture around $180 million of savings in 2019, also up from earlier commitment of $140 million.

Price Performance

Arconic's shares have rallied 70.7% year to date, outperforming the industry’s 18.1% rise.

Zacks Rank & Key Picks

Arconic currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth a look in the basic materials space include Agnico Eagle Mines Limited (NYSE:AEM) , Kinross Gold Corporation (NYSE:KGC) and Franco-Nevada Corporation (TSX:FNV) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 168.6% for the current year. The company’s shares have rallied 66% in a year’s time.

Kinross has projected earnings growth rate of 210% for the current year. The company’s shares have surged around 77% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 39.3% for the current year. The company’s shares have gained roughly 48% in a year’s time.

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