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Can Arconic (ARNC) Maintain Earnings Beat Streak in Q1?

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Arconic Inc. is scheduled to come up with its first-quarter 2019 results before the opening bell on Apr 30. The company is expected to benefit from strength across its key end-markets, especially aerospace, automotive and commercial transportation, and its actions to improve its operations in the to-be-reported quarter.

The Zacks Consensus Estimate for revenues for Arconic for the first quarter stands at $3,546 million, reflecting an expected year over year growth of 2.9%.

Arconic's shares have gained around 25.1% year to date compared with the roughly 28.3% rise recorded by the industry.


 

Let’s see how things are shaping up for this announcement.

Factors to Consider

Arconic remains focused on cost reduction and operational improvements across its businesses, which should lend support to its bottom line in the first quarter. The company will likely to benefit from its cost saving actions in the to-be-reported quarter.

The company should also benefit from strong demand across automotive and aerospace markets in the March quarter. Arconic is witnessing strength in the automotive market, driven by the transition of the auto industry to lightweighting. It is also seeing healthy demand trends in the aerospace market and is actively pursuing its aerospace expansion strategy.

Arconic is seeing strong momentum in aero engines and aero defense, as reflected by volume gains in these markets. Strong volume growth in the commercial transportation market is also contributing to its revenue growth. Momentum across these major markets is expected to continue in the first quarter, providing support to the company’s top line. Higher expected volumes across major end-markets will likely contribute to organic revenue growth in the quarter.

Arconic Inc. Price and EPS Surprise

 

Arconic Inc. Price and EPS Surprise | Arconic Inc. Quote

What the Zacks Model Says

Our proven model shows that Arconic is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is the case here, as you will see below:

Earnings ESP: Earnings ESP for Arconic is +5.06%. The Most Accurate Estimate is 42 cents and the Zacks Consensus Estimate is pegged at 40 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Arconic currently carries a Zacks Rank #2, which when combined with a positive ESP makes us reasonably confident of earnings beat.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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 too have the right combination of elements to post an earnings beat this quarter:

Eldorado Gold Corporation (EGO - Free Report) has an Earnings ESP of +21.05% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AK Steel Holding Corporation has an Earnings ESP of +4.59% and carries a Zacks Rank #3.

Ingevity Corporation (NGVT - Free Report) has an Earnings ESP of +6.77% and carries a Zacks Rank #3.

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