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Allegheny's (ATI) Earnings and Sales Beat Estimates in Q3

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·4 min read
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Allegheny Technologies Inc. ATI slipped to a net loss of $50.1 million or 40 cents per share in third-quarter 2020 from net income of $111 million or 78 cents per share in the prior-year quarter.

Excluding one-time items, adjusted loss per share was 38 cents, narrower than the Zacks Consensus Estimate of a loss of 58 cents.

The company delivered revenues of $598 million in the quarter, down 41.3% year over year. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $588.9 million.

Allegheny Technologies Incorporated Price, Consensus and EPS Surprise

Allegheny Technologies Incorporated Price, Consensus and EPS Surprise
Allegheny Technologies Incorporated Price, Consensus and EPS Surprise

Allegheny Technologies Incorporated price-consensus-eps-surprise-chart | Allegheny Technologies Incorporated Quote

Segment Highlights

In the third quarter, revenues in the High-Performance Materials & Components (“HPMC”) segment declined 51% year over year to $221.3 million. The company stated that 78% of unit sales were attributable to the aerospace and defense markets. Sales of next-generation jet engine products contributed 19% to total HPMC jet engine product sales. Operating loss in the unit was $2.7 million against operating profits of $68.4 million in the prior-year quarter. Reduced asset utilization rates and lower overall demand affected operating margins.

The Advanced Alloys & Solutions (“AA&S”) segment’s sales fell 34% year over year to $376.7 million. Total sales to all energy markets declined 42% year over year. Operating loss in the division totaled $4.1 million against operating profits of $30.8 million in the prior-year quarter.

Financial Position

Allegheny ended the third quarter with cash and cash equivalents of $572.2 million, up 11.9% year over year. Long-term debt fell 0.8% year over year at $1,529 million.

Cash provided by operating activities for the first nine months of 2020 was $45 million.

Outlook

Allegheny expects fourth-quarter results to be affected by the coronavirus pandemic and its impact on commercial aerospace market, which is its largest end-market. It anticipates modest improvements in commercial aerospace in 2021. The company proactively seeking opportunities to turn itself into a more-streamlined and profitable aerospace and defense supplier as the aerospace industry recovers.

Price Performance

Shares of Allegheny have lost 50.8% in the past year compared with the industry’s 60.3% decline.

Zacks Rank & Other Key Picks

Allegheny currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Agnico Eagle Mines Limited AEM, Barrick Gold Corporation GOLD and B2Gold Corp BTG. While Barrick and Agnico Eagle 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.

Agnico Eagle has an expected earnings growth rate of 102.1% for 2020. Its shares have returned 31.4% in the past year.

Barrick has an expected earnings growth rate of 100% for 2020. The company’s shares have surged 53.9% in the past year.

B2Gold has an expected earnings growth rate of 250% for 2020. The company’s shares have gained 83.1% in the past year.

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Allegheny Technologies Incorporated (ATI) : Free Stock Analysis Report
 
Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
 
B2Gold Corp (BTG) : Free Stock Analysis Report
 
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