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Arconic (ARNC) Q2 Earnings Preview: A Beat in the Cards?
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Arconic Inc. , a global leader in multi-material, precision engineered products and solutions for a variety of industries, is slated to release its second-quarter 2017 results before the bell on Jul 24.
Arconic’s adjusted earnings of 33 cents per share for the first quarter rose year over year and topped the Zacks Consensus Estimate of 25 cents. The company gained from its cost-saving actions in the quarter that more than offset unfavorable price and mix.
Revenues went up 4.5% year over year to $3,192 million, also coming ahead of the Zacks Consensus Estimate of $3,017 million. Sales were driven by improved volumes across all segments.
Let’s see how things are shaping up for this announcement.
Earnings Whispers
Our proven model shows that Arconic is likely to beat estimates this quarter because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP for Arconic is +11.11% as the Most Accurate Estimate is currently at 30 cents, while the Zacks Consensus Estimate is pegged at 27 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Arconic holds a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #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.
Arconic’s shares got battered last month on reports that the company supplied flammable panels used at London's Grenfell Tower, the high-rise where at least 80 people died in a deadly fire that occurred on June 14. The company, on June 26, said that it is discontinuing the sales of the product, Reynobond PE, for use in high-rise applications in light of the tragedy. Its shares tumbled around 9% a day after the news, taking their total losses since the Grenfell Tower disaster to around 21%.
Nevertheless, Arconic has outperformed the Zacks categorized Mining-Non Ferrous industry year to date. The company’s shares have gained around 35.5% over this period, compared with roughly 15.3% gain recorded by the industry.
Arconic, in April, backed its guidance for full-year 2017. The company sees revenues in the range of $11.8 billion to $12.4 billion and adjusted earnings of $1.10 to $1.20 per share for 2017.
The company also noted that it will remain focused on capital efficiency, growth actions, cost cutting and improving margin in 2017. Moreover, Arconic said that it is well placed in the aerospace market that is continuing its transition to new platforms.
Arconic is focusing on cost reduction and productivity improvements across its businesses, which should continue to lend support to its bottom line in the second quarter. Arconic is targeting gross productivity of 4.5% to 5.5% of revenues and net savings of around 2% of revenues in 2017.
Arconic holds strong positions in attractive markets. The company is seeing healthy demand trends in the aerospace market (accounts for roughly 40% of the company’s total revenues) and is actively pursuing its aerospace expansion strategy. It is well placed to gain from major contract wins in aerospace.
Arconic is also well placed to capture the growing demand for aluminum sheet stemming from the transition of the North American auto industry to lightweighting. The company leverages its breakthrough Micromill technology that manufacture the most advanced aluminum sheet on the market. The company’s Global Rolled Products (GRP) segment is expected to continue to gain from strong automotive volumes in the June quarter.
However, Arconic is witnessing softness across certain end-use markets. The company is seeing lower volumes in the heavy-duty truck and trailer market in North America that is affected by lower build rates. Weakness in this market is hurting commercial transportation revenues. The company’s move to ramp down production at its Tennessee packaging business may also have some impact on its revenues. Arconic plans to exit that business in 2018.
Stocks That Warrant a Look
Here are some other companies in the basic materials space 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 +4.44% and a Zacks Rank #1.
Endeavour Silver Corp. (EXK - Free Report) has an Earnings ESP of +100% and a Zacks Rank #2.
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Arconic (ARNC) Q2 Earnings Preview: A Beat in the Cards?
Arconic Inc. , a global leader in multi-material, precision engineered products and solutions for a variety of industries, is slated to release its second-quarter 2017 results before the bell on Jul 24.
Arconic’s adjusted earnings of 33 cents per share for the first quarter rose year over year and topped the Zacks Consensus Estimate of 25 cents. The company gained from its cost-saving actions in the quarter that more than offset unfavorable price and mix.
Revenues went up 4.5% year over year to $3,192 million, also coming ahead of the Zacks Consensus Estimate of $3,017 million. Sales were driven by improved volumes across all segments.
Let’s see how things are shaping up for this announcement.
Earnings Whispers
Our proven model shows that Arconic is likely to beat estimates this quarter because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP for Arconic is +11.11% as the Most Accurate Estimate is currently at 30 cents, while the Zacks Consensus Estimate is pegged at 27 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Arconic holds a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #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.
Arconic Inc. Price and EPS Surprise
Arconic Inc. Price and EPS Surprise | Arconic Inc. Quote
Factors to Consider
Arconic’s shares got battered last month on reports that the company supplied flammable panels used at London's Grenfell Tower, the high-rise where at least 80 people died in a deadly fire that occurred on June 14. The company, on June 26, said that it is discontinuing the sales of the product, Reynobond PE, for use in high-rise applications in light of the tragedy. Its shares tumbled around 9% a day after the news, taking their total losses since the Grenfell Tower disaster to around 21%.
Nevertheless, Arconic has outperformed the Zacks categorized Mining-Non Ferrous industry year to date. The company’s shares have gained around 35.5% over this period, compared with roughly 15.3% gain recorded by the industry.
Arconic, in April, backed its guidance for full-year 2017. The company sees revenues in the range of $11.8 billion to $12.4 billion and adjusted earnings of $1.10 to $1.20 per share for 2017.
The company also noted that it will remain focused on capital efficiency, growth actions, cost cutting and improving margin in 2017. Moreover, Arconic said that it is well placed in the aerospace market that is continuing its transition to new platforms.
Arconic is focusing on cost reduction and productivity improvements across its businesses, which should continue to lend support to its bottom line in the second quarter. Arconic is targeting gross productivity of 4.5% to 5.5% of revenues and net savings of around 2% of revenues in 2017.
Arconic holds strong positions in attractive markets. The company is seeing healthy demand trends in the aerospace market (accounts for roughly 40% of the company’s total revenues) and is actively pursuing its aerospace expansion strategy. It is well placed to gain from major contract wins in aerospace.
Arconic is also well placed to capture the growing demand for aluminum sheet stemming from the transition of the North American auto industry to lightweighting. The company leverages its breakthrough Micromill technology that manufacture the most advanced aluminum sheet on the market. The company’s Global Rolled Products (GRP) segment is expected to continue to gain from strong automotive volumes in the June quarter.
However, Arconic is witnessing softness across certain end-use markets. The company is seeing lower volumes in the heavy-duty truck and trailer market in North America that is affected by lower build rates. Weakness in this market is hurting commercial transportation revenues. The company’s move to ramp down production at its Tennessee packaging business may also have some impact on its revenues. Arconic plans to exit that business in 2018.
Stocks That Warrant a Look
Here are some other companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Westlake Chemical Corporation (WLK - Free Report) has an Earnings ESP of +5.04% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chemours Company (CC - Free Report) has an Earnings ESP of +4.44% and a Zacks Rank #1.
Endeavour Silver Corp. (EXK - Free Report) has an Earnings ESP of +100% and a Zacks Rank #2.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy...
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>