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Allegheny Technologies (ATI) Q3 Earnings: A Beat in Store?
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Allegheny Technologies Incorporated (ATI - Free Report) is scheduled to release third-quarter 2018 results on Oct 23, before the opening bell.
In the last reported quarter, the company reported net earnings of $72.8 million or 52 cents per share, up from $10.1 million or 9 cents in the prior-year quarter and also surpassing the Zacks Consensus Estimate of 36 cents.
The company reported revenues of $1,009.5 million in the quarter, up 15% year over year. However, sales missed the Zacks Consensus Estimate of $1,023.5 million.
Notably, Allegheny outpaced the Zacks Consensus Estimate in in three of the trailing four quarters, delivering an average positive surprise of 42.7%.
Allegheny has outperformed the industry in a year’s time. Shares of the company have gained around 11% compared with the industry’s growth of around 5.7% over the same period.
Will the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for the forthcoming announcement.
Earnings Whispers
Our proven model shows that Allegheny is likely to beat estimates in the to-be-reported quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:
Earnings ESP: Earnings ESP of Allegheny is +8.48%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 41 cents and 37 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors at Play
During the second-quarter earnings call, Allegheny stated that it expects year-over-year growth in operating margin and revenues in its High Performance Materials & Components (HPMC) unit in the second half of 2018 on improved asset utilization and aerospace market demand.
The Zacks Consensus Estimate for consolidated revenues for the third quarter is $1,001 million, reflecting an expected increase of around 16.9% year over year.
Allegheny’s Flat-Rolled Products (FRP) division benefited from higher shipment volume for high-value products, primarily nickel-based and specialty alloys in the second quarter and the company’s expects strong end-market demand to continue in third-quarter 2018. The unit is also expected to benefit from current operational improvements. Allegheny also anticipates growth in differentiated products and expects to benefit from the A&T Stainless joint venture (JV).
Allegheny also projects modestly lower ferrochrome prices and slightly higher nickel prices in the third quarter. It expects lower raw material benefit in the third quarter on a sequential comparison basis.
Allegheny continues to improve its cost structure with its gross cost reduction initiative. The company continues to expect strong second-half cash generation with at least $150 million of free cash flow for 2018, which excludes contributions to the ATI Pension Plan.
Allegheny’s JV with Tsingshan Group Company will offer cost competitive stainless sheet products, made for the North American market, through a unique combination of Allegheny’s innovative, low-cost HRPF, and Tsingshan’s unparalleled Indonesian refining, mining and castings assets, along with the JV’s unique Direct Roll Anneal and Pickle facility in Midland, PA.
Moreover, the JV supports Allegheny’s considerable investment in the U.S. manufacturing operations, especially in its HRPF facility, which will provide value addition to the processing services for the JV’s finished products.
Allegheny Technologies Incorporated Price and EPS Surprise
Here are some other companies in the basic materials space that you may also want to consider, as our model shows these also have the right combination of elements to post an earnings beat in the to-be-reported quarter:
CF Industries Holdings, Inc. (CF - Free Report) has an Earnings ESP of +12.07% and carries a Zacks Rank #1.
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +3.75% and holds a Zacks Rank #2.
Ingevity Corporation (NGVT - Free Report) has an Earnings ESP of +6.95% and carries a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Allegheny Technologies (ATI) Q3 Earnings: A Beat in Store?
Allegheny Technologies Incorporated (ATI - Free Report) is scheduled to release third-quarter 2018 results on Oct 23, before the opening bell.
In the last reported quarter, the company reported net earnings of $72.8 million or 52 cents per share, up from $10.1 million or 9 cents in the prior-year quarter and also surpassing the Zacks Consensus Estimate of 36 cents.
The company reported revenues of $1,009.5 million in the quarter, up 15% year over year. However, sales missed the Zacks Consensus Estimate of $1,023.5 million.
Notably, Allegheny outpaced the Zacks Consensus Estimate in in three of the trailing four quarters, delivering an average positive surprise of 42.7%.
Allegheny has outperformed the industry in a year’s time. Shares of the company have gained around 11% compared with the industry’s growth of around 5.7% over the same period.
Will the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for the forthcoming announcement.
Earnings Whispers
Our proven model shows that Allegheny is likely to beat estimates in the to-be-reported quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:
Earnings ESP: Earnings ESP of Allegheny is +8.48%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 41 cents and 37 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Allegheny currently carries a Zacks Rank #3, which when combined with a positive ESP make us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors at Play
During the second-quarter earnings call, Allegheny stated that it expects year-over-year growth in operating margin and revenues in its High Performance Materials & Components (HPMC) unit in the second half of 2018 on improved asset utilization and aerospace market demand.
The Zacks Consensus Estimate for consolidated revenues for the third quarter is $1,001 million, reflecting an expected increase of around 16.9% year over year.
Allegheny’s Flat-Rolled Products (FRP) division benefited from higher shipment volume for high-value products, primarily nickel-based and specialty alloys in the second quarter and the company’s expects strong end-market demand to continue in third-quarter 2018. The unit is also expected to benefit from current operational improvements. Allegheny also anticipates growth in differentiated products and expects to benefit from the A&T Stainless joint venture (JV).
Allegheny also projects modestly lower ferrochrome prices and slightly higher nickel prices in the third quarter. It expects lower raw material benefit in the third quarter on a sequential comparison basis.
Allegheny continues to improve its cost structure with its gross cost reduction initiative. The company continues to expect strong second-half cash generation with at least $150 million of free cash flow for 2018, which excludes contributions to the ATI Pension Plan.
Allegheny’s JV with Tsingshan Group Company will offer cost competitive stainless sheet products, made for the North American market, through a unique combination of Allegheny’s innovative, low-cost HRPF, and Tsingshan’s unparalleled Indonesian refining, mining and castings assets, along with the JV’s unique Direct Roll Anneal and Pickle facility in Midland, PA.
Moreover, the JV supports Allegheny’s considerable investment in the U.S. manufacturing operations, especially in its HRPF facility, which will provide value addition to the processing services for the JV’s finished products.
Allegheny Technologies Incorporated Price and EPS Surprise
Allegheny Technologies Incorporated Price and EPS Surprise | Allegheny Technologies Incorporated Quote
Other Stocks Poised to Beat Estimates
Here are some other companies in the basic materials space that you may also want to consider, as our model shows these also have the right combination of elements to post an earnings beat in the to-be-reported quarter:
CF Industries Holdings, Inc. (CF - Free Report) has an Earnings ESP of +12.07% and carries a Zacks Rank #1.
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +3.75% and holds a Zacks Rank #2.
Ingevity Corporation (NGVT - Free Report) has an Earnings ESP of +6.95% and carries a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>