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Will Century Aluminum (CENX) Surprise in Q2 Earnings?
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Century Aluminum Co. (CENX - Free Report) is scheduled to report second-quarter 2016 results after the closing bell on Jul 28. In the last quarter, this aluminum company had delivered a positive earnings surprise of 32.35%. The company has outperformed the Zacks Consensus Estimate in two of the trailing four quarters while missing in the other two, with an average negative surprise of 19.22%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Century Aluminum slipped to a loss in first-quarter 2016. The company recorded a net loss of $16.2 million (or $0.19 per share) in the quarter versus a profit of $73.8 million (or $0.76 per share) recorded a year ago. The company stated that capacity additions and production growth in China have been persisting despite weak domestic demand. The excess production, backed by illegal subsidies, continues to support exports which have caused material damage to its industry. The company remains hopeful that only strong enforcement of international trade laws will lead to a fair and even playing field for the industry.
Century Aluminum is implementing a number of actions to reduce costs and preserve cash amid a weak pricing environment. The company anticipates achieving annualized savings of $40–$65 million through these measures that include operating-expense cuts and headcount reduction.
Century Aluminum is expected to benefit from acquisitions (especially Mt. Holly) and value-added investment projects. The key regions for the company – the U.S. and China – are also witnessing robust growth in aluminum requirements for the automotive and aerospace industry.
Century Aluminum recently renegotiated a market-based agreement with a third-party supplier to provide roughly 75% of the power requirements for the Mt. Holly smelter. The balance 25% of the smelter’s power requirement will continue to be supplied by Santee Cooper. The new agreement will allow the smelter to continue to operate at around 50% capacity while it looks for a competitive long-term arrangement.
However, the company is faced with a weak pricing environment. LME aluminum prices still remain under pressure due to supply glut aggravated by high levels of exports of aluminum by China (the world’s biggest producer) amid weakening demand at home.
Our proven model does not conclusively show that Century Aluminum is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Century Aluminum is currently 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate, both stand at a loss of 9 cents.
Zacks Rank: Century Aluminum carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies in the basic materials sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
AK Steel Holding Corporation has an Earnings ESP of +100.00% and a Zacks Rank #2 (Buy).
FMC Corp. (FMC - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #2 (Buy).
Huntsman Corporation (HUN - Free Report) has an Earnings ESP of +7.84% and a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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Will Century Aluminum (CENX) Surprise in Q2 Earnings?
Century Aluminum Co. (CENX - Free Report) is scheduled to report second-quarter 2016 results after the closing bell on Jul 28. In the last quarter, this aluminum company had delivered a positive earnings surprise of 32.35%. The company has outperformed the Zacks Consensus Estimate in two of the trailing four quarters while missing in the other two, with an average negative surprise of 19.22%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Century Aluminum slipped to a loss in first-quarter 2016. The company recorded a net loss of $16.2 million (or $0.19 per share) in the quarter versus a profit of $73.8 million (or $0.76 per share) recorded a year ago.
The company stated that capacity additions and production growth in China have been persisting despite weak domestic demand. The excess production, backed by illegal subsidies, continues to support exports which have caused material damage to its industry. The company remains hopeful that only strong enforcement of international trade laws will lead to a fair and even playing field for the industry.
Century Aluminum is implementing a number of actions to reduce costs and preserve cash amid a weak pricing environment. The company anticipates achieving annualized savings of $40–$65 million through these measures that include operating-expense cuts and headcount reduction.
Century Aluminum is expected to benefit from acquisitions (especially Mt. Holly) and value-added investment projects. The key regions for the company – the U.S. and China – are also witnessing robust growth in aluminum requirements for the automotive and aerospace industry.
Century Aluminum recently renegotiated a market-based agreement with a third-party supplier to provide roughly 75% of the power requirements for the Mt. Holly smelter. The balance 25% of the smelter’s power requirement will continue to be supplied by Santee Cooper. The new agreement will allow the smelter to continue to operate at around 50% capacity while it looks for a competitive long-term arrangement.
However, the company is faced with a weak pricing environment. LME aluminum prices still remain under pressure due to supply glut aggravated by high levels of exports of aluminum by China (the world’s biggest producer) amid weakening demand at home.
CENTURY ALUM CO Price and EPS Surprise
CENTURY ALUM CO Price and EPS Surprise | CENTURY ALUM CO Quote
Earnings Whispers
Our proven model does not conclusively show that Century Aluminum is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Century Aluminum is currently 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate, both stand at a loss of 9 cents.
Zacks Rank: Century Aluminum carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies in the basic materials sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
AK Steel Holding Corporation has an Earnings ESP of +100.00% and a Zacks Rank #2 (Buy).
FMC Corp. (FMC - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #2 (Buy).
Huntsman Corporation (HUN - Free Report) has an Earnings ESP of +7.84% and a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>