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Century Aluminum (CENX) Q3 Earnings: A Beat in the Cards?
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Century Aluminum Co. (CENX - Free Report) is scheduled to report third-quarter 2016 results after the closing bell on Oct 27.
Century Aluminum’s adjusted net loss for second-quarter 2016 was narrower than the Zacks Consensus Estimate. However, revenues fell by double digits year over year and missed expectations. The company has outperformed the Zacks Consensus Estimate in three of the trailing four quarters while missing in one.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Century Aluminum, in the last quarter earnings call, said that additional distortions in the currency markets and in interest rates have further pressured prices of commodities. Demand in the end markets, however, remains strong barring some exceptions.
The company also noted that production is expected to increase considerably in China during the second half of 2016 from new capacity as well as from the restart of curtailed plants. The primary aluminum industry in China continues to be boosted by state support, which is illegal under global trade rules. This is causing considerable damage to the U.S. aluminum industry.
Aluminum prices, which have recovered somewhat of late, 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 Aluminum is implementing a number of actions to reduce costs and preserve cash amid a still challenging operating environment. The company anticipates achieving annualized savings of $40–$65 million through these measures that include operating-expense cuts and headcount reduction. Century Aluminum should also benefit from acquisitions and value-added investment projects.
Century Aluminum, in July, reached a new agreement with a third-party supplier to purchase the majority of electric power required for its Mt. Holly smelter. However, the company continues to be required to purchase 25% of the plant's power consumption from the state-owned provider. The agreement has allowed the smelter to continue to operate at around 50% capacity while the company looks for a competitive long-term arrangement.
Our proven model shows that Century Aluminum is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: The Earnings ESP for Century Aluminum is +100% as the Most Accurate estimate stands at a break even while the Zacks Consensus Estimate is pegged at a loss of a penny. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Century Aluminum currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings.
Conversely, sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Century Aluminum’s Zacks Rank #3 and positive ESP makes us reasonably confident of an earnings beat.
Stocks that Warrant a Look
Here are some stocks in the basic materials space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Chemours Company (CC - Free Report) has an Earnings ESP of +25.71% and a Zacks Rank #1.
B2Gold Corp. (BTG - Free Report) has an Earnings ESP of +25% and a Zacks Rank #2.
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Century Aluminum (CENX) Q3 Earnings: A Beat in the Cards?
Century Aluminum Co. (CENX - Free Report) is scheduled to report third-quarter 2016 results after the closing bell on Oct 27.
Century Aluminum’s adjusted net loss for second-quarter 2016 was narrower than the Zacks Consensus Estimate. However, revenues fell by double digits year over year and missed expectations. The company has outperformed the Zacks Consensus Estimate in three of the trailing four quarters while missing in one.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Century Aluminum, in the last quarter earnings call, said that additional distortions in the currency markets and in interest rates have further pressured prices of commodities. Demand in the end markets, however, remains strong barring some exceptions.
The company also noted that production is expected to increase considerably in China during the second half of 2016 from new capacity as well as from the restart of curtailed plants. The primary aluminum industry in China continues to be boosted by state support, which is illegal under global trade rules. This is causing considerable damage to the U.S. aluminum industry.
Aluminum prices, which have recovered somewhat of late, 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 Aluminum is implementing a number of actions to reduce costs and preserve cash amid a still challenging operating environment. The company anticipates achieving annualized savings of $40–$65 million through these measures that include operating-expense cuts and headcount reduction. Century Aluminum should also benefit from acquisitions and value-added investment projects.
Century Aluminum, in July, reached a new agreement with a third-party supplier to purchase the majority of electric power required for its Mt. Holly smelter. However, the company continues to be required to purchase 25% of the plant's power consumption from the state-owned provider. The agreement has allowed the smelter to continue to operate at around 50% capacity while the company looks for a competitive long-term arrangement.
CENTURY ALUM CO Price and EPS Surprise
CENTURY ALUM CO Price and EPS Surprise | CENTURY ALUM CO Quote
Earnings Whispers
Our proven model shows that Century Aluminum is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: The Earnings ESP for Century Aluminum is +100% as the Most Accurate estimate stands at a break even while the Zacks Consensus Estimate is pegged at a loss of a penny. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Century Aluminum currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings.
Conversely, sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Century Aluminum’s Zacks Rank #3 and positive ESP makes us reasonably confident of an earnings beat.
Stocks that Warrant a Look
Here are some stocks in the basic materials space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Chemours Company (CC - Free Report) has an Earnings ESP of +25.71% and a Zacks Rank #1.
Teck Resources Limited has Earnings ESP of +4.55% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
B2Gold Corp. (BTG - Free Report) has an Earnings ESP of +25% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>