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Century (CENX) Down 11.8% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Century Aluminum (CENX). Shares have lost about 11.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Century due for a breakout? 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.

Century Aluminum’s Earnings & Sales Lag Estimates in Q3

Century Aluminum recorded a net loss of $20.7 million or 23 cents per share in third-quarter 2019 compared with a loss of $20.3 million or 23 cents in the year-ago quarter.

Barring one-time items, adjusted loss was 39 cents per share, wider than the Zacks Consensus Estimate of a loss of 27 cents.

Revenues and Shipments  

The company logged revenues of $438 million in the quarter, down around 9.1% year over year. The downside was caused by lower London Metal Exchange (LME) aluminum prices. The figure also missed the Zacks Consensus Estimate of $442.9 million.

Shipments of primary aluminum totaled 198,543 tons in the third quarter, up around 8.5% year over year. On a sequential-comparison basis, shipment fell 2.4% due to weaker-than-expected production at the Hawesville plant.

Financials

At the end of the quarter, the company had cash and cash equivalents of $22.5 million, down around 69.3% year over year. Net cash used in operating activities was $59 million for the first nine months of 2019.

Outlook

Per the company, external environment remains complex. Century Aluminum witnessed sluggish growth in many of the customers’ markets, which caused the decline in product premiums. However, relatively low inventory levels as well as global demand-supply balance is consistent with a healthy market. Also, alumina prices have returned to more normalized levels.

The Hawesville plant is expected to return to full production in 2020. Notably, the three newly rebuilt potlines are fully operational. The company hopes to extend the life of the last potline to be refurbished later in 2019.

Century Aluminum disconnected one of the two operating lines earlier this year. Rebuilding is on schedule and the cells are expected to restart in January 2020. Also, the line is expected to return at full production by the end of first-quarter 2020.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -58.33% due to these changes.

VGM Scores

Currently, Century has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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

Century has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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