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Kaiser (KALU) Stock Jumps 9%: Will It Continue to Soar?

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Kaiser Aluminum (KALU - Free Report) shares soared 9% in the last trading session to close at $77.26. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 29.7% loss over the past four weeks.

Kaiser Aluminum’s share price have been gaining on continued strength in demand for the company’s general engineering and packaging applications, and steadily improving demand for its aerospace/high strength applications.

Higher value added revenue on pricing initiatives and it's efforts to improve manufacturing efficiency is driving margin. KALU expects year-over-year increase in value added revenue of 20% to 25% and a consolidated adjusted EBITDA margin growth of 17% to 20% for the current year.

This aluminum products company is expected to post quarterly earnings of $0.75 per share in its upcoming report, which represents a year-over-year change of -25%. Revenues are expected to be $1.06 billion, up 42.7% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Kaiser, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on KALU going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Kaiser is a member of the Zacks Metal Products - Procurement and Fabrication industry. One other stock in the same industry, Timken (TKR - Free Report) , finished the last trading session 5.9% higher at $54.88. TKR has returned -13.7% over the past month.

For Timken, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.36. This represents a change of -0.7% from what the company reported a year ago. Timken currently has a Zacks Rank of #3 (Hold).


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