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Is ATI Stock a Screaming Buy After a 130% Rally in a Year?

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Key Takeaways

  • ATI's shares surged 129.9% as aerospace and defense demand drove growth and lifted its outlook.
  • ATI's Q2 sales rose 13%, while record backlog hit $4.4 billion and defense revenue jumped 36%.
  • ATI raised 2026 EBITDA, earnings and free cash flow guidance on stronger margins and demand.

ATI Inc.’s (ATI - Free Report) shares have surged 129.9% in the past year, outperforming the Zacks Aerospace - Defense Equipment industry’s decline of 10.6% and the S&P 500’s 18.1% increase. ATI is benefiting from investments in capacity expansion coupled with consistent demand growth in its key sectors that aids volume growth and pricing. A raised outlook and margin expansion also boost investors’ confidence.

ATI’s peers, Carpenter Technology Corporation (CRS - Free Report) and Howmet Aerospace Inc. (HWM - Free Report) , have gained 56% and 17.9%, respectively, over the same period.

ATI’s One-year Price Performance

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Technical indicators show that ATI is currently trading above its 200-day simple moving average (SMA), suggesting a long-term uptrend. The stock slipped below its 50-day SMA on Sept. 10, 2026. Following a golden crossover on May 29, 2025, the 50-day SMA is reading higher than the 200-day SMA, indicating a bullish trend.

ATI Trades Below 50-Day SMA

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Let’s take a look at ATI’s fundamentals to analyze the stock better.

Aerospace and Defense Strength Fuels ATI’s Growth

ATI benefits from strong aerospace and defense demand, supporting solid multi-year growth prospects. Aerospace remains a key growth engine, with rising aircraft and next-generation jet engine production fueling demand for ATI’s proprietary nickel-based superalloys, titanium products, forgings and other specialty materials. The increasing adoption of next-generation engines further enhances this opportunity, as these platforms require greater amounts of advanced alloys per engine. Expanding defense opportunities and long-term customer agreements are also improving revenue visibility. This favorable outlook is further supported by recent upward revisions to the company’s expectations for both segments.

In the second quarter of 2026, aerospace and defense sales rose 13% year over year, while backlog reached a record $4.4 billion, up 18%. Jet-engine revenues increased 13%, with management expecting high-teens full-year growth. Defense revenues surged 36% to a record high, supported by a renewed naval nuclear agreement through 2030 that is expected to more than double annual revenues versus the prior contract. ATI also expects mid- to high-single-digit airframe growth in 2026. ATI's content on next-generation engines is more than double that of legacy platforms, positioning the company to benefit from a higher number of newer aircraft platforms.

Margin Expansion and Capacity Investments Add Upside

ATI's operational transformation is strengthening profitability. Second-quarter adjusted EBITDA jumped 37% year over year to $284.4 million, while margin expanded 440 basis points to 22.6%. The elevATIon program has increased throughput, while targeted titanium and nickel investments are expected to raise nickel capacity by 15-20% by early 2028 and support approximately $350 million of incremental annual nickel-based revenue. These initiatives, combined with a loyal customer base, position ATI for sustained earnings growth.

Raised Outlook Instills Investor Confidence in ATI Stock

For full-year 2026, ATI raised adjusted EBITDA guidance to $1.14-$1.2 billion from its previous outlook of $1.01-$1.06 billion. Adjusted earnings guidance was increased to $4.9-$5.18 per share from $4.2-$4.48 previously. The company also lifted its full-year adjusted free cash flow forecast to $550-$600 million from the earlier range of $465-$525 million. Management expects targeted investments and operational execution to increase available capacity as demand for aerospace and defense materials remains strong.

Strong Financial Health Supports ATI’s Capital Allocation

ATI remains focused on enhancing shareholder value by strengthening and sustaining its cash flow generation. 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. The company is taking steps to reduce seasonality and improve the consistency of its cash flows. Strong free cash flow generation is being supported by higher adjusted EBITDA and improved operating performance, with healthy aerospace and defense demand expected to sustain cash generation. 

Debt reduction, aided by stronger margins and improved cash flows, is enhancing ATI’s financial flexibility. The company also remains committed to returning capital to its shareholders through share repurchases, supported by disciplined and strategic capital allocation.

ATI considers buybacks the most efficient way to return capital to shareholders. It returned $470 million to its shareholders in 2025 in the form of share repurchases. Following the $50 million repurchase in the second quarter, ATI has $495 million remaining under its current buyback authorization.

ATI’s Earnings Estimates Northbound

The Zacks Consensus Estimate for ATI’s 2026 earnings has been going up over the past 60 days. The consensus estimate for third-quarter 2026 earnings has also been revised upward over the same time frame. 

The Zacks Consensus Estimate for 2026 earnings is currently pegged at $5.11, suggesting year-over-year growth of 57.7%. Earnings are expected to register roughly 58.8% growth in the third quarter.

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A Look at ATI’s Valuation

ATI is currently trading at a forward price-to-sales ratio of 4.65, below the industry. It is trading at a discount to Howmet Aerospace and Carpenter Technology. ATI currently has a Value Score of D, while both Howmet Aerospace and Carpenter Technology have a Value Score of F.

ATI’s P/S F12M Vs. Industry, HWM and CRS

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Final Thoughts: Buy ATI Shares

Operational enhancements, portfolio optimization, pricing gains and a favorable product mix are helping ATI achieve stronger incremental margins. Along with the “elevATIon” program, these initiatives are designed to improve productivity and maximize output from existing assets. Collectively, these gains are expected to support ATI’s growth momentum and provide further upside potential.

ATI’s solid financial health, improving cash flows and disciplined capital allocation also add to its appeal. With strong demand visibility and healthy earnings growth prospects, ATI appears well-positioned to deliver value to its investors, making this Zacks Rank #1 (Strong Buy) stock a prudent choice to bet on now.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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