Allegheny Technologies Incorporated (NYSE:ATI) is scheduled to release first-quarter 2018 results, before the market opens on Apr 24.
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Allegheny Technologies Incorporated (ATI): Free Stock Analysis Report
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The company recorded adjusted earnings of 27 cents per share for the fourth quarter of 2017, which surpassed the Zacks Consensus Estimate of 14 cents. Revenues for the quarter rose 14% year over year to $910 million, beating the Zacks Consensus Estimate of $904.5 million.
Alleghany outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 41.7%.
Let’s see how things have shaped up for the forthcoming announcement.
Allegheny Technologies Incorporated Price and EPS Surprise
Factors at Play
Allegheny expects continued operating margin improvement and revenue growth in its High Performance Metals and Components (HPMC) unit in 2018 resulting from improved asset utilization and ongoing aerospace market demand growth. Allegheny also expects its Flat-Rolled Products (FRP) unit to build on the operational improvements and product mix benefits attained last year and improve operating margins.
However, the company expects first-quarter 2018 results to be unfavorably impacted by roughly $10 million, on a sequential basis, owing to reduced ferrochrome surcharges and required accounting changes on retirement benefit cost capitalization in inventory. The company sees the production ramp-up of the proposed joint venture with Tsingshan Stainless to benefit FRP results in second-half 2018.
For the first quarter, Allegheny’s revenues are expected to be $932.6 million, reflecting an estimated year-over-year growth of 7.7%.
Last month, Allegheny and Tsingshan Group formed their previously announced 50-50 JV deal to produce 60-inch wide stainless sheet products for the North American market. The JV will be a 50-50 equity investment with the partners sharing its cash flows and operating profit. Moreover, all necessary regulatory and anti-trust clearances for the JV have been received on time and initial customer shipments are expected in the first half of 2018.
The JV will offer cost competitive stainless sheet products made for the North American market through a unique combination of Allegheny’s innovative, low-cost Hot Rolling and Processing Facility (“HRPF”) and Tsingshan’s unparalleled Indonesian refining, mining and castings assets, and the JV’s unique Direct Roll Anneal and Pickle facility in Midland, PA.
The JV supports Allegheny’s considerable investment in the U.S. manufacturing operations, especially its HRPF facility, which will provide value addition to the processing services for the JV’s finished products.
Per the company, this move will also benefit its FRP unit that employs more than 2,000 people in the United States. Moreover, the JV will lay foundations for the company’s long-term objectives and additionally support job creation in the United States by directly creating roughly 100 manufacturing jobs in Western Pennsylvania.
Allegheny’s shares have soared 53.8% in a year, outperforming the industry’s 40% gain.
Our proven model conclusively shows that Allegheny is likely to beat estimates this quarter because it has the right combination of two key ingredients.
Zacks ESP: Allegheny has an Earnings ESP of +9.38%. This is because the Most Accurate estimate is 25 cents while the Zacks Consensus Estimate is pegged at 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Allegheny sports a Zacks Rank #1 (Strong Buy), which when combined with a positive ESP, makes us confident of an earnings beat. Note that stocks with — a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 (Hold) — have significantly higher chance of beating earnings estimates.
Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
Other Stocks to Consider
Here are some other companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:
WestRock Company (NYSE:WRK) has an Earnings ESP of +2.32% and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
FMC Corporation (NYSE:FMC) has an Earnings ESP of +1.43% and carries a Zacks Rank #2.
Kinross Gold Corporation (NYSE:KGC) has an Earnings ESP of +18.75% and carries a Zacks Rank #3.
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Allegheny Technologies Incorporated (ATI): Free Stock Analysis Report
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