Arconic Inc. (ARNC - Free Report) stock looks promising at the moment. The company’s shares have surged more than 83% over the trailing 12-month period.
If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to your portfolio as it is poised to sustain the momentum.
Let’s delve into the factors that make this company an attractive investment option.
Upbeat 2019 View
In November, Arconic raised adjusted earnings per share (EPS) guidance for 2019. The company now expects adjusted EPS at $2.07-$2.11, up from its earlier expectation of $1.95-$2.05. The revised guidance partly reflects the benefits of cost reduction actions. 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 EPS for fourth-quarter 2019 to be in the range of 49 cents to 53 cents, higher than 33 cents recorded in fourth-quarter 2018.
Shares of Arconic have surged 83.1% in the past year, outperforming the industry’s rally of 36.8%.
Strong Demand to Boost Growth
Arconic is gaining from strong demand in automotive and aerospace markets. The company is seeing healthy demand in aero engines and aero defense markets as evident from double-digit growth in organic revenues recorded in the third quarter. Volume gains in the commercial transportation market are also contributing to organic revenue growth. Strength across these key markets is expected to support the company’s full-year revenues.
Focus on Cost-Cutting to Improve Margins
Arconic is focused on cost reduction and operational improvements across businesses, which is expected to drive the bottom line in 2019. The company has raised the annualized cost reduction commitment to nearly $280 million on a run-rate basis, up from its prior expectation of $260 million. It expects to capture around $180 million of savings in 2019, also up from previous projection of $140 million.
Estimates Moving North
Earnings estimate revisions have the greatest impact on stock prices. The Zacks Consensus Estimate for Arconic has moved north in the past two months. Over this period, earnings estimates for the fourth quarter have moved up 3.8% while the same for 2019 rose 3.4%.
Zacks Rank & Other Key Picks
Arconic currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the basic materials space are Impala Platinum Holdings Limited (IMPUY - Free Report) , Pan American Silver Corp (PAAS - Free Report) and B2Gold Corp (BTG - Free Report) . While Impala Platinum and Pan American Silver currently sport a Zacks Rank #1 (Strong Buy), B2Gold carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Impala Platinum Holdings has projected earnings growth rate of 255.2% for fiscal 2020. The company’s shares have skyrocketed 307.6% over a year.
Pan American Silver has an estimated earnings growth rate of 56.4% for 2019. Its shares have returned 63% in the past year.
B2Gold has an expected earnings growth rate of 43.8% for 2019. The company’s shares have gained 35.6% in the past year.
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