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Is ATI Positioned to Sustain Strong Free Cash Flow Growth?
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Key Takeaways
ATI's first-half adjusted free cash flow rose to $143.2M from a prior-year $50.2M cash outflow.
Strong aerospace and defense demand, contract pricing gains and higher-value products support ATI's margins.
ATI raised its 2026 adjusted free cash flow guidance to $550M-$600M from $465M-$525M.
ATI Inc. (ATI - Free Report) is generating strong free cash flow, supported by higher adjusted EBITDA and improved operating performance. It reported first-half 2026 adjusted free cash flow of $143.2 million, up from a $50.2 million cash outflow during the same period in the previous year. Its robust cash generation is expected to continue as demand remains strong across aerospace and defense markets.
The company’s pricing improvements in its long-term contracts have enabled higher margins. It has also been focused on its higher-value aerospace and defense products. Growing demand for next-generation engines, naval nuclear programs and other defense applications, where its content on next-generation engines is more than double that of legacy platforms, positions ATI for an upbeat growth momentum. ATI’s targeted investments and operational improvements will further translate into higher production, enabling higher shipments.
These combined factors have led the company to raise its adjusted free cash flow guidance for 2026 from prior guidance of $465-$525 million to $550-$600 million. The guidance is also strengthened by its higher projection of adjusted EBITDA and adjusted EPS for full-year 2026.
Among its major peers, Carpenter Technology Corporation (CRS - Free Report) generated a higher adjusted free cash flow of $362.3 million for fiscal 2026 compared with $287.5 million in fiscal 2025. The improvements in product mix, higher realized prices, as well as expanded operating efficiencies support the expansion. For fiscal 2027, Carpenter Technologyexpects to generate free cash flow in the range of $400 million to $430 million.
Howmet Aerospace Inc. (HWM - Free Report) recorded free cash flow of roughly $838 million for the first six months of 2026, up from the previous-year period’s $478 million. This upside was backed by strong growth in the commercial aerospace, defense aerospace and gas turbines markets. Howmet expects full-year 2026 free cash flow to be in the range of $1,850-$1,950 million.
The Zacks Rundown for ATI
Shares of ATI have shot up 122.1% in the past year against the Zacks Aerospace - Defense Equipment industry’s decline of 9%.
Image Source: Zacks Investment Research
From a valuation standpoint, ATI is currently trading at a forward price-to-sales multiple of 4.45, a discount to the industry average of 7.12X. It carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ATI’s 2026 and 2027 earnings implies a year-over-year rise of 54% and 23.7%, respectively. The EPS estimates for 2026 and 2027 have been trending higher over the past 30 days.
View the Zacks #1 Rank List
Image: Bigstock
Is ATI Positioned to Sustain Strong Free Cash Flow Growth?
Key Takeaways
ATI Inc. (ATI - Free Report) is generating strong free cash flow, supported by higher adjusted EBITDA and improved operating performance. It reported first-half 2026 adjusted free cash flow of $143.2 million, up from a $50.2 million cash outflow during the same period in the previous year. Its robust cash generation is expected to continue as demand remains strong across aerospace and defense markets.
The company’s pricing improvements in its long-term contracts have enabled higher margins. It has also been focused on its higher-value aerospace and defense products. Growing demand for next-generation engines, naval nuclear programs and other defense applications, where its content on next-generation engines is more than double that of legacy platforms, positions ATI for an upbeat growth momentum. ATI’s targeted investments and operational improvements will further translate into higher production, enabling higher shipments.
These combined factors have led the company to raise its adjusted free cash flow guidance for 2026 from prior guidance of $465-$525 million to $550-$600 million. The guidance is also strengthened by its higher projection of adjusted EBITDA and adjusted EPS for full-year 2026.
Among its major peers, Carpenter Technology Corporation (CRS - Free Report) generated a higher adjusted free cash flow of $362.3 million for fiscal 2026 compared with $287.5 million in fiscal 2025. The improvements in product mix, higher realized prices, as well as expanded operating efficiencies support the expansion. For fiscal 2027, Carpenter Technologyexpects to generate free cash flow in the range of $400 million to $430 million.
Howmet Aerospace Inc. (HWM - Free Report) recorded free cash flow of roughly $838 million for the first six months of 2026, up from the previous-year period’s $478 million. This upside was backed by strong growth in the commercial aerospace, defense aerospace and gas turbines markets. Howmet expects full-year 2026 free cash flow to be in the range of $1,850-$1,950 million.
The Zacks Rundown for ATI
Shares of ATI have shot up 122.1% in the past year against the Zacks Aerospace - Defense Equipment industry’s decline of 9%.
Image Source: Zacks Investment Research
From a valuation standpoint, ATI is currently trading at a forward price-to-sales multiple of 4.45, a discount to the industry average of 7.12X. It carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ATI’s 2026 and 2027 earnings implies a year-over-year rise of 54% and 23.7%, respectively. The EPS estimates for 2026 and 2027 have been trending higher over the past 30 days.
Image Source: Zacks Investment Research
ATI stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.