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What's in Store for Century Aluminum (CENX) in Q1 Earnings?

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Century Aluminum (CENX - Free Report) is scheduled to report first-quarter 2017 results after the closing bell on Apr 25.

Century Aluminum posted a loss of $168.5 million or $1.93 per share on a reported basis in fourth-quarter 2016. Adjusted loss of 12 cents for the quarter was narrower than the Zacks Consensus Estimate of a loss of 16 cents. Revenues declined year over year owing to lower shipments and curtailment actions, and missed expectations.

The company has outperformed the Zacks Consensus Estimate in three of the trailing four quarters while missing in one.

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

Century Aluminum Company Price and EPS Surprise


Factors to Consider

Century Aluminum, in its fourth-quarter call, said that it made progress on a number of strategic fronts including the sale of the remaining assets at its original operating smelter in Ravenswood, WV. The company has excellent opportunities in the U.S. and Europe markets and will thus remain committed to invest in modest high return projects not dependent upon the prices of aluminum.

Century Aluminum is implementing a number of measures to reduce costs and preserve cash amid a weak operating environment. The company expects to achieve annualized savings of $40 million to $65 million through these initiatives that includes operating expense cuts and headcount reduction.

Century Aluminum is also expected to benefit from acquisitions and value added investment projects. Moreover, the company has low debt and short-term obligations which will help it remain strong in an adverse environment.

However, Century Aluminum is still facing a difficult pricing environment, which may continue to affect its earnings. High levels of exports from China are keeping aluminum prices under pressure. China is expected to be in a surplus position in 2017. Significant capacity additions from China would outpace consumption and further worsen the country’s already oversupplied position.

Moreover, Century Aluminum continues to see higher prices of alumina (which the company purchases from third-party suppliers) as witnessed in the last reported quarter. The company is also seeing high power costs.

Price Performance

Century Aluminum shares gained around 61.9% in the past six months, outperforming the Zacks categorized Metal Procurement & Fabrication industry’s 8.7% gain.

Earnings Whispers

Our proven model does not conclusively show that Century Aluminum is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Century Aluminum is currently -100%. This is because the Most Accurate estimate is at a loss of 32 cents while the Zacks Consensus Estimate is pegged at a loss of 16 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Century Aluminum’s Zacks Rank #3 increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.

Note that Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are some companies in the industrial products space that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Caterpillar, Inc. (CAT - Free Report) has an Earnings ESP of +9.84% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere & Company (DE - Free Report) has an Earnings ESP of +2.50% and flaunts a Zacks Rank #1.

Parker-Hannifin Corporation (PH - Free Report) has an Earnings ESP of +0.54% and sports a Zacks Rank #1.

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