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Why Is Arconic (ARNC) Up 2.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Arconic (ARNC - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Arconic due for a pullback? 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.

Arconic Beats Earnings & Revenue Estimates in Q3

Arconic logged profits (as reported) of $161 million or 32 cents per share in the third quarter of 2018, up from $119 million or 22 cents in the year-ago quarter. Earnings per share beat the Zacks Consensus Estimate of 30 cents.

Arconic reported revenues of $3,524 million, up around 8.9% year over year, exceeding the Zacks Consensus Estimate of $3,484.3 million. Organic revenues rose 7% year over year, driven by higher volumes across the board on the back of growth in automotive, aerospace engines, defense and industrial, commercial transportation as well as building & construction markets.

Segment Highlights

EP&S: Revenues from the division came in at $1.6 billion for the reported quarter, up 6% year over year. Organic revenues in the segment rose 6%, supported by growth in aerospace engines and defense.

GRP: Revenues in the division amounted to $1.4 billion in the quarter, up 16% year over year. Organic revenues in the segment rose 9%, driven by higher industrial and automotive volume.

TCS: Revenues in the segment amounted to $530 million, up 1% year over year. Organic revenues in the segment rose 8%, supported by higher volume in commercial transportation and building and construction.

Financial Position

As of Sep 30, 2018, Arconic had cash and cash equivalents of roughly $1,535 million, down around 15.4% year over year. Long-term debt fell roughly 7.2% year over year to $6,315 million.

Adjusted free cash flow nearly tripled year over year to $115 million in the quarter.

Outlook

Arconic provided an updated guidance for 2018. It now expects adjusted earnings in the range of $1.28-$1.34 per share, up from the prior expectation of $1.17-$1.27 per share. However, it continues to expect revenues for 2018 in the range of $13.7-$14 billion and adjusted free cash flow of roughly $250 million.
 
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Arconic has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

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




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