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Arconic (ARNC) Lands Multi-Year Supply Deal with Toyota
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Arconic has landed a multi-year agreement with Toyota North America to supply aluminum to Toyota for its all-new Lexus RX. The deal makes Arconic the sole supplier of aluminum sheet to Toyota for the Lexus RX, named by Consumer Reports as the “Best Luxury SUV” of 2016.
Lexus RX debuted in 2016 and became Toyota’s first vehicle in North America to prominently feature aluminum exterior panels. Arconic will supply aluminum from its facilities in Davenport, IA, and Danville, IL. The agreement draws on the strong automotive expertise and manufacturing capabilities of Arconic’s Global Rolled Products business.
The agreement marks an expansion of Arconic’s relationship with Toyota. Automakers globally are increasingly switching to aluminum for stronger, tougher, higher performing vehicles that consumers demand, Arconic noted. Several bestselling vehicles in America have converted to aluminum for better performance (including enhanced fuel efficiency, increased towing and payload capacity and improved vehicle safety scores), a trend which is expected to continue moving ahead.
Arconic has outperformed the Zacks categorized Mining-Non Ferrous industry year to date, aided by strong demand for its products across aerospace and automotive markets and its efforts to improve cost structure through company-wide productivity actions. The company’s shares have gained around 48.5% over this period, compared with roughly 11.8% gain recorded by the industry.
Arconic’s adjusted earnings and revenues for fourth-quarter 2016 beat the respective Zacks Consensus Estimate. The company, in its fourth-quarter call, said that it will remain focused on cost cutting and improving margin and return on net assets in 2017.
Arconic is well positioned to capture the growing demand for aluminum sheet stemming from the transition of the North American auto industry to lightweighting. It is the market leader in providing aluminum sheet to the North American automotive market. The company leverages its breakthrough Micromill technology that manufacture the most advanced aluminum sheet on the market.
The Micromill process produces an aluminum alloy that has 40% greater formability and 30% greater strength than the current automotive aluminum. The process also adheres to the stringent automotive surface quality requirements. Automotive parts made with the Micromill material are twice as formable and their formability characteristics are comparable to mild steels.
Arconic expects its automotive sheet revenues to grow to $1.3 billion in 2018 from $76 million in 2010.
Amerigo Resources has an expected earnings growth rate of 325% for the current year.
U.S. Steel has an expected long-term EPS growth rate of 8%.
Ternium has an expected long-term EPS growth rate of 18.4%.
Zacks' 2017 IPO Watch List Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Arconic (ARNC) Lands Multi-Year Supply Deal with Toyota
Arconic has landed a multi-year agreement with Toyota North America to supply aluminum to Toyota for its all-new Lexus RX. The deal makes Arconic the sole supplier of aluminum sheet to Toyota for the Lexus RX, named by Consumer Reports as the “Best Luxury SUV” of 2016.
Lexus RX debuted in 2016 and became Toyota’s first vehicle in North America to prominently feature aluminum exterior panels. Arconic will supply aluminum from its facilities in Davenport, IA, and Danville, IL. The agreement draws on the strong automotive expertise and manufacturing capabilities of Arconic’s Global Rolled Products business.
The agreement marks an expansion of Arconic’s relationship with Toyota. Automakers globally are increasingly switching to aluminum for stronger, tougher, higher performing vehicles that consumers demand, Arconic noted. Several bestselling vehicles in America have converted to aluminum for better performance (including enhanced fuel efficiency, increased towing and payload capacity and improved vehicle safety scores), a trend which is expected to continue moving ahead.
Arconic has outperformed the Zacks categorized Mining-Non Ferrous industry year to date, aided by strong demand for its products across aerospace and automotive markets and its efforts to improve cost structure through company-wide productivity actions. The company’s shares have gained around 48.5% over this period, compared with roughly 11.8% gain recorded by the industry.
Arconic’s adjusted earnings and revenues for fourth-quarter 2016 beat the respective Zacks Consensus Estimate. The company, in its fourth-quarter call, said that it will remain focused on cost cutting and improving margin and return on net assets in 2017.
Arconic is well positioned to capture the growing demand for aluminum sheet stemming from the transition of the North American auto industry to lightweighting. It is the market leader in providing aluminum sheet to the North American automotive market. The company leverages its breakthrough Micromill technology that manufacture the most advanced aluminum sheet on the market.
The Micromill process produces an aluminum alloy that has 40% greater formability and 30% greater strength than the current automotive aluminum. The process also adheres to the stringent automotive surface quality requirements. Automotive parts made with the Micromill material are twice as formable and their formability characteristics are comparable to mild steels.
Arconic expects its automotive sheet revenues to grow to $1.3 billion in 2018 from $76 million in 2010.
Arconic currently carries a Zacks Rank #2 (Buy).
Arconic Inc. Price and Consensus
Arconic Inc. Price and Consensus | Arconic Inc. Quote
Other Stocks to Consider
Other well-placed companies in the basic materials space include Amerigo Resources Ltd. (ARREF - Free Report) , United States Steel Corporation (X - Free Report) and Ternium S.A. (TX - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amerigo Resources has an expected earnings growth rate of 325% for the current year.
U.S. Steel has an expected long-term EPS growth rate of 8%.
Ternium has an expected long-term EPS growth rate of 18.4%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>