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Arconic (ARNC) Up 2.7% Since Last Earnings Report: Can It Continue?

Zacks Equity Research
Brown & Brown (BRO) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

It has been about a month since the last earnings report for Arconic (ARNC). 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 Arconic 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 Earnings Top, Sales Miss Estimates in Q1

Arconic logged profits (as reported) of $187 million or 39 cents per share in first-quarter 2019, up from $143 million or 29 cents in the prior-year quarter.

Barring one-time items, adjusted earnings per share came in at 43 cents. The figure beat the Zacks Consensus Estimate of 40 cents.

Arconic generated revenues of $3,541 million, up around 2.8% year over year. It missed the Zacks Consensus Estimate of $3,546 million.

Segment Highlights

EP&S: Revenues in the division totaled $1.5 billion, up 5% year over year. Organic revenues in the segment rose 7%, which were supported by volume growth in aerospace engines and defense.

GRP: Revenues in the division amounted to $1.5 billion in the quarter, up 1% year over year. Organic revenues in the segment rose 10%.

TCS: Revenues in the segment were $535 million, flat year over year. Organic revenues in the segment rose 7%.

Financial Position

As of Mar 31, 2019, Arconic had cash and cash equivalents of roughly $1,319 million, up around 9.5% year over year. Long-term debt fell roughly 6.5% year over year to $5,899 million.

Cash used for operations was $258 million in the quarter.

Outlook

Arconic provided updated full-year 2019 guidance. The company expects revenues in the range of $14.3-$14.6 billion.  Adjusted earnings are expected in the range of $1.75-$1.90 per share, up from the prior expectations of $1.55-$1.65. Adjusted free cash flow is projected between $650 million and $750 million, also up from previous guidance of $400-$500 million. The company also expects adjusted earnings of 46-51 cents per share for the second quarter.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 7.39% due to these changes.

VGM Scores

At this time, Arconic has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Arconic has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.



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