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Bear of the Day: ATI Inc (ATI)

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The Zacks Steel-Specialty Industry is currently in the bottom 20% of almost 250 Zacks industries and ATI Inc (ATI - Free Report)  appears to be a stock to avoid among the space.

As a diversified specialty metals producer, it may be time to take any profits in ATI stock which is up +20% for the year. To that point, earnings estimate revisions are noticeably lower for ATI after the company reported subpar Q3 results in late October.

 

Aerospace Uncertainty

Although ATI remains confident in long-term demand for its services, the company is dealing with uncertainty across its aerospace customer base due to what it has called an industry-wide slowing of the aircraft production ramp.

This has been caused by a work stoppage in the supply chain with ATI’s Q3 sales of $1.05 billion and EPS of $0.60 missing the Zacks Consensus by -7% and -9% respectively.  

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Image Source: Zacks Investment Research

 

 

Declining EPS Revisions

Following its subpar Q3 results fiscal 2024 EPS estimates have dropped 8% in the last 60 days. More concerning is that FY25 EPS estimates are down 11% over the last two months.

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Image Source: Zacks Investment Research

 

Increased Competition

Further suggesting now may be the time to sell ATI stock is that the company is facing increased competition from Carpenter Technology (CRS - Free Report) .

Notably, Carpenter Technology’s stock sports a Zacks Rank #1 (Strong Buy) based on a trend of positive earnings estimate revisions with Worthington Steel (WS - Free Report)  being another competitor that may be a more viable option in regard to specialty steel manufactures at the moment.

 

Bottom Line

Investors are often looking for ample time to take profits in a stock and now appears to be such a scenario for ATI Inc shares. This is not to say ATI won’t be a viable investment in the future, but the trend of declining earnings estimate revisions does suggest more short-term weakness ahead. 


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