Allegheny (ATI) To Invest $95 Million For Capacity Expansion

Allegheny Technologies Incorporated’s (NYSE:ATI) board of directors approved a $95-million investment to expand its iso-thermal forging and heat-treating capacities. This self-funded project will help meet growing demand from the aerospace jet engine market.

This project represents Allegheny’s fourth iso-thermal press and will be located at the company's iso-thermal forging center of excellence in Cudahy, WI. The expansion is expected to be completed within three years, post which it will fully qualify for aerospace-related production.

Further, it will enable the company to meet the increasing production requirements for existing long-term agreements with engine OEM partners. Also, the company’s High Performance Materials and Components ("HPMC") segment will benefit from the expansion that will produce technologically advanced powder-to-iso-thermally-forged jet engine components.

Shares of Allegheny have moved up 37.2% over a year, outperforming the industry’s gain of 20.3%.

Revenues from the company’s HPMC segment rose 9% year over year to $517.7 million in the fourth quarter of 2017 on the back of higher sales of forged and cast components and nickel-based and specialty alloys.

Allegheny expects continued operating margin improvement and revenue growth in its HPMC unit in 2018 resulting from improved asset utilization and ongoing aerospace market demand growth. The company also expects its Flat-Rolled Products (FRP) unit to build on the operational improvements and product mix benefits attained last year and increase operating margins.

Allegheny Technologies Incorporated Price and Consensus

Allegheny Technologies Incorporated Price and Consensus | Allegheny Technologies Incorporated Quote

Zacks Rank & Other Stocks to Consider

Allegheny currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space are LyondellBasell Industries N.V. (NYSE:LYB) , Kronos Worldwide Inc. (NYSE:KRO) and BASF SE (OTC:BASFY) .

LyondellBasell has an expected long-term earnings growth rate of 9% and sports a Zacks Rank #1. The company’s shares have moved up 18% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kronos has an expected long-term earnings growth rate of 5% and flaunts a Zacks Rank #1. Its shares have gained 43.5% over a year.

BASF has an expected long-term earnings growth rate of 6.7% and carries a Zacks Rank #2 (Buy). Its shares have moved up 1.3% in a year.

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