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Arconic's (ARNC) Shares Rally 60% in a Year: Here's Why

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Shares of Arconic Inc. ARNC have surged 60.3% over a year. The company has also outperformed its industry’s rise of 26% over the same time frame. 

Arconic, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $14 billion. Average volume of shares traded in the last three months was around 2,857.6K.


Let’s delve deeper into the factors behind the stock’s price appreciation.

What’s Driving ARNC?

Forecast-topping earnings performance, buoyant outlook and compelling growth prospects have contributed to the rally in Arconic’s shares. The company is gaining from strong growth across its key end-markets and its actions to improve its operations.

Arconic, in November, raised its earnings guidance for full-year 2019. It now expects adjusted earnings in the range of $2.07-$2.11 per share for the year, up from its earlier expectation of $1.95-$2.05 per share. The revised guidance partly reflects the benefits of its cost reduction actions.

Arconic has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 10.7%.

Growth prospects for Arconic also look encouraging. The Zacks Consensus Estimate for earnings for 2020 currently stands at $2.42 per share, reflecting an expected year-over-year growth of 13.6%.

Arconic is focused on cost reduction and operational improvements across its businesses, which is driving its bottom line. The company has 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 for full-year 2019, also up from earlier commitment of $140 million.

Moreover, Arconic is benefiting from strong demand in automotive and aerospace markets. The company is seeing healthy demand in aero engines and aero defense markets with double digit growth in organic revenues as witnessed in the last reported quarter. Arconic is also seeing strong momentum in the automotive market, driven by the transition of the auto industry to lightweighting. Volume gains in the commercial transportation market is also contributing to the company’s organic revenue growth.

Arconic Inc. Price and Consensus


Arconic Inc. Price and Consensus

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


Stocks to Consider

Some better-ranked stocks worth considering in the basic materials space include Daqo New Energy Corp. (DQ - Free Report) , Pan American Silver Corp. PAAS and Sibanye Gold Limited SBGL

Daqo New Energy has projected earnings growth rate of 294.7% for 2020 and sports a Zacks Rank #1 (Strong Buy). The company’s shares have rallied roughly 107% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pan American Silver has estimated earnings growth rate of 38.1% for 2020 and carries a Zacks Rank #1. The company’s shares have shot up roughly 53% in a year’s time.

Sibanye Gold has projected earnings growth rate of 587.5% for 2020 and carries a Zacks Rank #2 (Buy). The company’s shares have surged around 243% over a year.

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