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Universal Stainless (USAP) Surges 76% in 3 Months: Here's Why
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Universal Stainless & Alloy Products, Inc.‘s (USAP - Free Report) shares have rallied 75.9% in the past three months. Owing to the upside, the stock outperformed the industry’s rise of 10.2% over the same time frame. The company has topped the S&P 500’s 10.6% rise in the same period.
Image Source: Zacks Investment Research
Let’s discuss the factors driving this Zacks Rank #1 (Strong Buy) stock.
What’s Driving Universal Stainless?
In the third quarter, USAP demonstrated a robust financial performance, with earnings doubling from the previous quarter’s levels and registering an impressive 54% year-over-year growth in sales, reaching $71.3 million. The substantial increase in premium alloy sales, fueled by heightened aerospace demand, played a pivotal role in advancing the development of specialty alloys. Aerospace sales in the third quarter reached a record high of $53.9 million, contributing 75.6% to total sales and surging 70.3% from the prior-year quarter’s levels.
The company's gross margin exhibited consistent improvement, reaching $10.9 million and contributing 15.2% to sales — the highest level since the second quarter of 2018. This positive trend was driven by a favorable product mix and higher selling prices, effectively offsetting negative surcharge misalignment stemming from declining commodity prices.
USAP is in the commissioning phase of its capital project, integrating two Vacuum-Arc Remelt (VAR) furnaces into the North Jackson facility. Upon completion, this initiative is expected to boost the company's capacity in premium and specialty alloys by 20%, facilitating the expansion of its portfolio with technologically advanced, higher-margin products, particularly in aerospace applications, including defense.
In the third quarter, USAP exceeded expectations by reporting adjusted earnings of 20 cents per share, surpassing the Zacks Consensus Estimate of 15 cents. This marked the company's fourth consecutive quarter of positive earnings surprises, with an average beat of 44.4%. The Zacks Consensus Estimate for USAP's 2023 earnings is pegged at 52 cents, indicating a remarkable year-over-year surge of 170.3%. The consensus estimate for the current year's earnings underwent a positive revision of 15.6% in the past 90 days, underscoring the robust growth potential of the company.
Universal Stainless & Alloy Products, Inc. Price and Consensus
The Zacks Consensus Estimate for LEU’s current-year earnings has been revised upward by 30.5% in the past 60 days. LEU beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 47.7%. The company’s shares have increased 35.1% in the past year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 53 cents, indicating a year-over-year surge of 89.3%. AGI beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have increased 17.8% in the past year.
The Zacks Consensus Estimate for CBT’s current fiscal-year earnings has been revised upward by 4.4% in the past 60 days. CBT beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 2.3%, on average. The stock has moved up around 9.5% in a year.
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Universal Stainless (USAP) Surges 76% in 3 Months: Here's Why
Universal Stainless & Alloy Products, Inc.‘s (USAP - Free Report) shares have rallied 75.9% in the past three months. Owing to the upside, the stock outperformed the industry’s rise of 10.2% over the same time frame. The company has topped the S&P 500’s 10.6% rise in the same period.
Image Source: Zacks Investment Research
Let’s discuss the factors driving this Zacks Rank #1 (Strong Buy) stock.
What’s Driving Universal Stainless?
In the third quarter, USAP demonstrated a robust financial performance, with earnings doubling from the previous quarter’s levels and registering an impressive 54% year-over-year growth in sales, reaching $71.3 million. The substantial increase in premium alloy sales, fueled by heightened aerospace demand, played a pivotal role in advancing the development of specialty alloys. Aerospace sales in the third quarter reached a record high of $53.9 million, contributing 75.6% to total sales and surging 70.3% from the prior-year quarter’s levels.
The company's gross margin exhibited consistent improvement, reaching $10.9 million and contributing 15.2% to sales — the highest level since the second quarter of 2018. This positive trend was driven by a favorable product mix and higher selling prices, effectively offsetting negative surcharge misalignment stemming from declining commodity prices.
USAP is in the commissioning phase of its capital project, integrating two Vacuum-Arc Remelt (VAR) furnaces into the North Jackson facility. Upon completion, this initiative is expected to boost the company's capacity in premium and specialty alloys by 20%, facilitating the expansion of its portfolio with technologically advanced, higher-margin products, particularly in aerospace applications, including defense.
In the third quarter, USAP exceeded expectations by reporting adjusted earnings of 20 cents per share, surpassing the Zacks Consensus Estimate of 15 cents. This marked the company's fourth consecutive quarter of positive earnings surprises, with an average beat of 44.4%. The Zacks Consensus Estimate for USAP's 2023 earnings is pegged at 52 cents, indicating a remarkable year-over-year surge of 170.3%. The consensus estimate for the current year's earnings underwent a positive revision of 15.6% in the past 90 days, underscoring the robust growth potential of the company.
Universal Stainless & Alloy Products, Inc. Price and Consensus
Universal Stainless & Alloy Products, Inc. price-consensus-chart | Universal Stainless & Alloy Products, Inc. Quote
Zacks Rank & Other Key Picks
Some other top-ranked stocks in the Basic Materials space are Centrus Energy Corp. (LEU - Free Report) , sporting a Zacks Rank #1 at present and Alamos Gold Inc. (AGI - Free Report) and Cabot Corporation (CBT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LEU’s current-year earnings has been revised upward by 30.5% in the past 60 days. LEU beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 47.7%. The company’s shares have increased 35.1% in the past year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 53 cents, indicating a year-over-year surge of 89.3%. AGI beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have increased 17.8% in the past year.
The Zacks Consensus Estimate for CBT’s current fiscal-year earnings has been revised upward by 4.4% in the past 60 days. CBT beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 2.3%, on average. The stock has moved up around 9.5% in a year.