U.S. markets close in 5 hours 54 minutes

Allegheny's A&T Stainless JV to Idle Facility Amid Tariffs

Zacks Equity Research

Allegheny Technologies Incorporated’s ATI A&T Stainless joint venture (50% ownership interest) intends to idle its Direct Roll Anneal and Pickle (DRAP) operations in Midland, PA, by the end of June 2020. The company stated that the Section 232 tariffs are making the business unsustainable.

A&T Stainless imports semi-finished stainless slab products from Indonesia, which is used for making 60-inch wide stainless sheet products. Since March 2018, 25% tariff is levied on all imported stainless-steel products into the United States under Section 232. Further, A&T Stainless has paid more than $37 million in tariffs. Allegheny’s 2019 results were affected by losses of $19.3 million stemming from A&T Stainless joint venture.   

The company does not have any viable alternative to imports and have suffered unsustainable losses under this economic policy. The company’s efforts to obtain tariff exclusion have been unsuccessful so far. As a result, it has no choice but to idle the Midland operations.

Notably, operations at the facility will continue during an orderly idling process by the end of second-quarter 2020. The company stated that the DRAP will be idled in a way that would allow operations to resume in case tariff policies were changed substantially.

Shares of Allegheny have lost 70.3% in the past year compared with the industry’s 62.4% decline.



Zacks Rank & Key Picks

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

Few better-ranked stocks in the basic materials space are Franco-Nevada Corporation FNV, Novagold Resources Inc. NG and Barrick Gold Corporation GOLD, all currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Franco-Nevada has an expected earnings growth rate of 37.6% for 2020. Its shares have returned 38.2% in the past year.    

Novagold has an expected earnings growth rate of 11.1% for fiscal 2020. The company’s shares have surged 84.6% in the past year.

Barrick has an expected earnings growth rate of 43.1% for 2020. The company’s shares have gained 40.2% in the past year.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


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
 
Allegheny Technologies Incorporated (ATI) : Free Stock Analysis Report
 
Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
 
Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
Novagold Resources Inc. (NG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research