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Allegheny (ATI) Provides Update on Q1 Financial Performance

Zacks Equity Research

Allegheny Technologies Incorporated ATI recently provided updates on first-quarter 2019 financial results. The company projects first-quarter earnings per share (EPS) in the range of 10-13 cents. Total sales are forecast to be around $1 billion for the quarter.

Notably, projected EPS figure is sequentially lower than fourth-quarter 2018’s tally of 30 cents. Per the company, financial results in the first quarter were dented by operational headwinds in both business segments.

The High Performance Materials and Components (HPMC) unit was affected by greater-than-expected persistent disruptions in third party nickel powder billet supply. Also, higher operating costs arising from the accelerated ramp up of nickel powder production and the temporary margin compression have hurt the segment’s performance.

The Flat Rolled Products (FRP) unit witnessed lower-than-expected demand in China for the STAL joint venture. Also, persistent softness in the high-end consumer electronics market affected performance in the segment. Lower demand along with higher operating costs for the company’s newly expanded STAL joint venture production facilities have impacted profitability in the to-be-reported quarter. Additionally, the U.S. Flat Rolled segment witnessed weaker-than-expected demand for commodity stainless products stemming from customer inventory destocking actions.

Allegheny believes that negative impacts in the segments may lessen during the second quarter. The company does not expect these issues to hurt financial performance in the second half of 2019. It is proactively working with customers to jointly address the current supply constraints associated with the ongoing aerospace production ramp up.

Shares of Allegheny have inched up 1% in the past year, against the industry’s 1.2% decline.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd. KL, AngloGold Ashanti Limited AU and Materion Corporation MTRN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland has an expected earnings growth rate of 8.8% for 2019. The company’s shares have surged 87.1% in the past year.

AngloGold Ashanti has an expected earnings growth rate of 66% for the current year. The company’s shares have gained 42.6% in a year’s time.

Materion has an expected earnings growth rate of 12.6% for 2019. Its shares have gained 10.6% in a year’s time.

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