Allegheny Technologies (ATI) Up 2.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Allegheny Technologies (ATI). Shares have added about 2.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Allegheny Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ATI’s Q2 Earnings Surpass Estimates, Revenues Fall Short
ATI recorded second-quarter 2023 profit of $76 million or 52 cents per share against the year-ago quarter's loss of $38 million or 31 cents per share.
ATI posted adjusted earnings of 59 cents per share, up 9% from the year-ago quarter figure of 54 cents. Adjusted earnings exceeded the Zacks Consensus Estimate of 55 cents.
The company’s net sales in the second quarter were $1,046 million, which slightly lagged the Zacks Consensus Estimate of $1,046.3 million. Net sales increased around 9% from $959.5 million in the prior-year quarter.
ATI's second-quarter results faced challenges with lower deliveries of nickel-based alloys and precision rolled strip products. Despite this, the company found support in increased margins from its High-Performance Materials & Components segment, which helped offset some of the impact.
Segment Highlights
The HPMC segment recorded sales of $527.1 million in the second quarter, representing a 33% increase compared to sales of $396.1 million in the year-ago quarter. It also surpassed our estimate of $480.7 million. During the reported quarter, HPMC's EBITDA for the segment reached $108.1 million. The company's ability to deliver incremental margins is attributed to the surge in volumes, particularly on higher-margin next-generation commercial aerospace platforms.
In the reported quarter, the AA&S segment reported sales of $518.9 million, around 8% lower than the previous year's quarter figure of $563.4 million. The figure beat our estimate of $517.5 million. The performance was impacted by recessionary softness observed in general industrial end markets, as well as the lingering effects of COVID-related disruptions, particularly affecting ATI’s Asian precision rolled strip business. AA&S segment's EBITDA for the quarter reached $63.2 million. The reduced deliveries of nickel-based alloys and precision rolled strip products in the second quarter of 2023 were the primary factors affecting the segment's performance. However, these challenges were partly mitigated by increased deliveries of titanium plate products.
Financials
For the second quarter of 2023, cash provided by operating activities was $68.1 million, up from cash used in operating activities of $5.2 million in the previous year quarter. The company’s long-term debt was $1,699.9 million, flat year over year.
Outlook
The successful restart of ATI’s Albany, OR titanium melt shop and ongoing brownfield expansion in Richland, WA position it favorably to seize market opportunities. Confident about delivering in 2023 and beyond, ATI remains focused on executing its long-term strategy.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.33% due to these changes.
VGM Scores
At this time, Allegheny Technologies has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Allegheny Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Allegheny Technologies belongs to the Zacks Steel - Speciality industry. Another stock from the same industry, Carpenter Technology (CRS), has gained 8.6% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Carpenter reported revenues of $758.1 million in the last reported quarter, representing a year-over-year change of +34.5%. EPS of $0.78 for the same period compares with $0 a year ago.
Carpenter is expected to post earnings of $0.75 per share for the current quarter, representing a year-over-year change of +635.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +31.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Carpenter. Also, the stock has a VGM Score of B.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ATI Inc. (ATI) : Free Stock Analysis Report
Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
