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Arconic's (ARNC) Earnings Top Estimates in Q3, Revenues Lag

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Arconic Inc. (ARNC - Free Report) logged profits (as reported) of $95 million or 21 cents per share in third-quarter 2019, down 41% from a profit of $161 million or 32 cents in the prior-year quarter. The bottom line was hurt by non-cash asset impairment charges of $108 million.

Barring one-time items, adjusted earnings per share were 58 cents, up from 32 cents a year ago. The figure topped the Zacks Consensus Estimate of 53 cents.

Arconic recorded revenues of $3,559 million, up around 1% year over year. It missed the Zacks Consensus Estimate of $3,602.4 million.

Organic revenues rose 6% year over year on the back of strong volumes across major markets and favorable pricing.

Arconic Inc. Price, Consensus and EPS Surprise


Arconic Inc. Price, Consensus and EPS Surprise

Arconic Inc. price-consensus-eps-surprise-chart | Arconic Inc. Quote


Segment Highlights

Engineered Products and Forgings (EP&F): Revenues in the division were $1.8 billion, up 7% year over year. Organic revenues in the segment rose 8%, supported by growth in aerospace engines, defense and commercial transportation.

Global Rolled Products (GRP): Revenues in the division fell 4% year over year to $1.8 billion in the quarter. Organic revenues in the segment went up 5%. The division gained from favorable pricing.

Financial Position

Arconic had cash and cash equivalents of $1,321 million at the end of the quarter, down around 14% year over year. Long-term debt fell roughly 22% year over year to $4,905 million.

Cash provided from operations was $52 million in the reported quarter.


Arconic provided its updated full-year 2019 guidance. It now expects revenues in the range of $14.15-$14.35 billion, down from its prior view of $14.3-$14.6 billion.

The company raised its adjusted earnings guidance for 2019 to the range of $2.07-$2.11 per share from its earlier expectation of $1.95-$2.05 per share. Moreover, the company continues to expect adjusted free cash flow to be in the band of $700-$800 million for 2019.

Arconic also expects adjusted earnings for the fourth quarter to be in the range of 49-53 cents.

Moreover, Arconic raised the annualized cost reduction commitment to roughly $280 million on a run-rate basis, from its prior expectation of $260 million. It expects to capture around $180 million of savings in 2019, also up from earlier commitment of $140 million.

Price Performance

Arconic's shares have rallied 70.7% year to date, outperforming the industry’s 18.1% rise.



Zacks Rank & Key Picks

Arconic currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth a look in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Kinross Gold Corporation (KGC - Free Report) and Franco-Nevada Corporation (FNV - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 168.6% for the current year. The company’s shares have rallied 66% in a year’s time.

Kinross has projected earnings growth rate of 210% for the current year. The company’s shares have surged around 77% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 39.3% for the current year. The company’s shares have gained roughly 48% in a year’s time.

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