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Why Is Century (CENX) Down 4.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Century Aluminum (CENX - Free Report) . Shares have lost about 4.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Century due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Century Aluminum Tops Q2 Earnings & Sales Estimates

Century Aluminum posted net income of $19.4 million or 20 cents per share in second-quarter 2018 compared with $7.1 million or 7 cents in the year-ago quarter. Results in the reported quarter were negatively impacted by $8.5 million from equipment failure at Sebree and expenses of $3 million associated with the Hawesville restart project.

Barring one-time items, adjusted earnings came in at 32 cents per share in the quarter, which beat the Zacks Consensus Estimate of 24 cents.

Revenues and Shipments

The company registered revenues of $470 million in the reported quarter, up around 20.9% year over year. The figure beat the Zacks Consensus Estimate of $458.9 million. Shipments of primary aluminum in the quarter were 180,220 tons, down 1.4% from 182,829 tons shipped in the year-ago quarter.    

Financials

As of Jun 30, 2018, the company had cash and cash equivalents of $124 million compared with $131.5 million in the year-ago period. Net cash used in operating activities for the quarter was $30.4 million.

Outlook

Century Aluminum stated that downstream demand in most regions and sectors, particularly in the United States continues to be strong. This is helping to generate attractive growth in the primary metal consumption. The Section 232 relief implemented by President Trump has resulted in considerable investment in the primary industry, the company noted. It expects the U.S. primary aluminum production to increase roughly 60% year over year by the end of 2018.  

The company sees attractive trading conditions amid recent pricing volatility. Prices of alumina are well above the fundamentally supported level, thanks to short-term concerns over actual and potential supply disruptions. Alumina prices have weakened in the past two months, but the trend is expected to reverse, per the company.

Century Aluminum is also on track to restart its idled capacity. It has started energizing cells in first of the three curtailed potlines at Hawesville in June and is rebuilding cells in the other two lines. Moreover, the restart project is within budget and on schedule. The company has also prepared the potline at Sebree for restart after power equipment failure in late May. It expects the process to be completed by the end of third-quarter 2018.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 11.11% due to these changes.

VGM Scores

Currently, Century has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.

Outlook

Century has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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