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Arconic (ARNC) Beats Earnings & Revenue Estimates in Q4

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Arconic Inc. logged profits (as reported) of $218 million or 44 cents per share in fourth-quarter 2018, against a net loss of $727 million or $1.51 per share in the prior-year quarter.

Barring one-time items, adjusted earnings per share (EPS) came in at 33 cents and beat the Zacks Consensus Estimate of 30 cents.

Revenues improved around 6.1% year over year to $3,472 million and surpassed the Zacks Consensus Estimate of $3,412.3 million.

Organic revenues rose 10% year over year on the back of higher volumes across all businesses, including double-digit growth in most major end markets.

2018 Highlights

In 2018, total revenues increased 8% year over year to $14 billion and organic revenues rose 7%.

Net income came in at $642 million or $1.30 per share, against a net loss of $74 million 28 cents per share.

Arconic Inc. Price, Consensus and EPS Surprise

 

Arconic Inc. Price, Consensus and EPS Surprise | Arconic Inc. Quote

 

Segment Highlights

Engineered Products and Solutions (EP&S): Revenues in the division totaled $1.6 billion for the reported quarter, up 8% year over year. Organic revenues in the segment rose 9%, supported by volume growth in aerospace engines and defense.

Global Rolled Products (GRP): Revenues in the division amounted to $1.4 billion in the quarter, up 9% year over year. Organic revenues in the segment rose 13%.

Transportation and Construction Solutions (TCS): Revenues in the segment amounted to $497 million, down 6% year over year. Organic revenues in the segment rose 4%.

Financial Position

As of Dec 31, 2018, Arconic had cash and cash equivalents of roughly $2,277 million, up around 5.9% year over year. Long-term debt fell roughly 13.4% year over year to $5,896 million.

Adjusted free cash flow in 2018 nearly tripled year over year to $465 million.

Outlook

Arconic provided guidance for full-year 2019. The company expects revenues in the range of $14.3-$14.6 billion. Adjusted EPS are projected in the band of $1.55-$1.65. Adjusted free cash flow is projected between $400 million and $500 million.

Portfolio Review Update

Arconic stated that its portfolio will be separated into Engineered Products & Forgings and Global Rolled Products. The company is considering the sale of businesses that do not fit into Engineered Products & Forgings or Global Rolled Products.

Price Performance

Arconic's shares have lost 27.7% in the past year compared with the industry’s 28.2% decline.



Zacks Rank & Stocks to Consider

Arconic currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the basic materials space include Rio Tinto plc (RIO - Free Report) , The Mosaic Company (MOS - Free Report) and Israel Chemicals Ltd (ICL - Free Report) . While Rio Tinto currently sports a Zacks Rank #1 (Strong Buy), Mosaic and Israel Chemicals carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rio Tinto has an expected earnings growth rate of 5.1% for 2019. The company’s shares have moved up 7.7% in the past year.

Mosaic has an expected earnings growth rate of 24% for 2019. Its shares have rallied 30.2% in a year’s time.

Israel Chemicals has an expected earnings growth rate of 11.1% for 2019. Its shares have improved 38.6% in a year’s time.

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