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Arconic's (ARNC) Shares Rise 17% in 6 Months: Here's Why

Zacks Equity Research

Arconic Inc.’s ARNC shares have gained 16.7% over the past six months, outperforming the industry’s growth of 11.8%.

The company has a market cap of roughly $12.7 billion and an average volume of shares traded in the last three months was around 2,988.9K.

Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.

 

 

Factors Driving Arconic

Strong earnings performance in the last reported quarter, upbeat outlook and healthy growth prospects have contributed to the upside in the company’s shares. Arconic is benefiting from strong growth across its key end-markets and its actions to improve operations.

In November 2019, it raised the earnings guidance for 2019. It now expects adjusted earnings of $2.07-$2.11 per share for the year, up from $1.95-$2.05 mentioned earlier. The revised guidance partly reflects the benefits of the company’s cost reduction actions.

Notably, Arconic outpaced the Zacks Consensus Estimate in each of the trailing four quarters. The company has a positive earnings surprise of 10.7%, on average, for the same timeframe.

Further, growth prospects for Arconic look encouraging. The Zacks Consensus Estimate for its earnings for 2020 currently stands at $2.33 per share, suggesting growth of 9.2% from the year-ago reported figure.

The company remains focused on cost reduction and operational improvements across its businesses, which should lend support to its bottom line.

Arconic has raised the annualized cost reduction commitment to approximately $280 million on a run-rate basis from $260 million stated earlier. It expects to capture approximately $180 million of savings for full-year 2019, also up from earlier commitment of $140 million.

Further, Arconic is gaining from strong demand across automotive and aerospace markets. The company is seeing strength in aero engines and aero defense markets as evident from double-digit growth in organic revenues in the last reported quarter.

Moreover, volume gains in the commercial transportation market are contributing to Arconic’s organic revenue growth. It is also seeing strong momentum in the automotive market.

Arconic Inc. Price and Consensus

 

Arconic Inc. Price and Consensus

Arconic Inc. price-consensus-chart | Arconic Inc. Quote

Stocks to Consider

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. DQ, Pan American Silver Corp. PAAS and Sibanye Gold Limited SBGL.

Daqo New Energy has a projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied 77.1% in a year. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pan American Silver has an estimated earnings growth rate of 26.1% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have gained 61.8% in a year.

Sibanye Gold has a Zacks Rank #2 and a projected earnings growth rate of 587.5% for 2020. The company’s shares have soared 299.7% in a year.

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