A month has gone by since the last earnings report for Arconic Inc. . Shares have added about 16.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Arconic's Q4 Earnings & Revenues Beat Estimates
Arconic logged a net loss, as reported, of $1.2 billion or $2.88 per share for the fourth quarter of 2016. The results include $1.4 billion of one-time items including charges related to the separation of Alcoa Inc. and restructuring and other separation costs.
Barring one-time items, earnings came in at $0.12 per share for the reported quarter. The results beat the Zacks Consensus Estimate of $0.11. Arconic recorded productivity gains of $186 million across all segments that more than offset higher costs and unfavorable price and mix.
Revenues for the quarter were $2,967 million, also coming ahead of the Zacks Consensus Estimate of $2,925 million.
This is Arconic’s first quarterly report following the business separation.
Segment Highlights
EPS – Revenues from the division came in at $1.4 billion in the fourth quarter. After-tax operating income (ATOI) was $138 million in the quarter. The segment gained from contributions of the RTI acquisition and productivity gains, partly offset by unfavorable pricing and mix, higher costs and investments in growth projects.
GRP – The division recorded sales of $1.1 billion in the quarter. ATOI came in at $45 million. Productivity gains and higher volumes in automotive were offset by higher costs, lower volumes in the heavy-duty truck market in North America, aerospace destocking and unfavorable currency impact.
TCS – The segment logged sales of $456 million and ATOI of $44 million in the quarter. The division gained from strong productivity gains and growth in the building and construction business.
Financial Position
Arconic ended the quarter with cash and cash equivalents of roughly $1.9 billion. Long-term debt was around $8 billion at the end of the quarter. Free cash flow for the fourth quarter was $354 million.
Outlook
Moving ahead, Arconic said that it will remain focused on cost cutting and improving margin and return on net assets in 2017.
For first-quarter 2017, the company sees revenues in the band of $2.8 billion to $3 billion and adjusted EBITDA of $420 million to $450 million.
For full-year 2017, Arconic expects revenues in the range of $11.8 billion to $12.4 billion, including $400 million of unfavorable impact from the Tennessee packaging ramp down. Adjusted EBITDA margin for the year is expected to be roughly 15%. The company projects adjusted earnings, barring special items, of $1.10 to $1.20 per share for 2017.
Arconic also expects free cash flow of $350 million or more for the full year. The company expects to reduce debt by $1 billion in 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter In the past month, the consensus estimate has shifted by 16.92% due to these changes.
VGM Scores
At this time, Arconic's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stocks in the next few months.
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Arconic (ARNC) Up 16.9% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Arconic Inc. . Shares have added about 16.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Arconic's Q4 Earnings & Revenues Beat Estimates
Arconic logged a net loss, as reported, of $1.2 billion or $2.88 per share for the fourth quarter of 2016. The results include $1.4 billion of one-time items including charges related to the separation of Alcoa Inc. and restructuring and other separation costs.
Barring one-time items, earnings came in at $0.12 per share for the reported quarter. The results beat the Zacks Consensus Estimate of $0.11. Arconic recorded productivity gains of $186 million across all segments that more than offset higher costs and unfavorable price and mix.
Revenues for the quarter were $2,967 million, also coming ahead of the Zacks Consensus Estimate of $2,925 million.
This is Arconic’s first quarterly report following the business separation.
Segment Highlights
EPS – Revenues from the division came in at $1.4 billion in the fourth quarter. After-tax operating income (ATOI) was $138 million in the quarter. The segment gained from contributions of the RTI acquisition and productivity gains, partly offset by unfavorable pricing and mix, higher costs and investments in growth projects.
GRP – The division recorded sales of $1.1 billion in the quarter. ATOI came in at $45 million. Productivity gains and higher volumes in automotive were offset by higher costs, lower volumes in the heavy-duty truck market in North America, aerospace destocking and unfavorable currency impact.
TCS – The segment logged sales of $456 million and ATOI of $44 million in the quarter. The division gained from strong productivity gains and growth in the building and construction business.
Financial Position
Arconic ended the quarter with cash and cash equivalents of roughly $1.9 billion. Long-term debt was around $8 billion at the end of the quarter. Free cash flow for the fourth quarter was $354 million.
Outlook
Moving ahead, Arconic said that it will remain focused on cost cutting and improving margin and return on net assets in 2017.
For first-quarter 2017, the company sees revenues in the band of $2.8 billion to $3 billion and adjusted EBITDA of $420 million to $450 million.
For full-year 2017, Arconic expects revenues in the range of $11.8 billion to $12.4 billion, including $400 million of unfavorable impact from the Tennessee packaging ramp down. Adjusted EBITDA margin for the year is expected to be roughly 15%. The company projects adjusted earnings, barring special items, of $1.10 to $1.20 per share for 2017.
Arconic also expects free cash flow of $350 million or more for the full year. The company expects to reduce debt by $1 billion in 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter In the past month, the consensus estimate has shifted by 16.92% due to these changes.
Arconic Inc. Price and Consensus
Arconic Inc. Price and Consensus | Arconic Inc. Quote
VGM Scores
At this time, Arconic's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stocks in the next few months.