What Makes Universal Stainless (USAP) a Solid Choice Right Now
Universal Stainless & Alloy Products, Inc. USAP witnessed a 42.1% surge in its stock value within a month, propelled by robust third-quarter earnings that exceeded expectations.
Presenting an enticing investment opportunity with strong growth prospects, USAP holds a Zacks Rank #2 (Buy).
Earnings Outperformance
In the third quarter, Universal Stainless outperformed expectations, posting earnings of 20 cents per share, surpassing the Zacks Consensus Estimate of 15 cents. With an impressive average surprise of 44.4%, the company exceeded earnings estimates in three of the last four quarters.
Robust Growth Prospects
The Zacks Consensus Estimate for USAP's 2023 earnings is pegged at 52 cents, indicating year-over-year growth of 170.3%. The consensus estimate for the current year has experienced an upward revision of 15.6% in the past 60 days, underlining healthy growth potential.
An Outperformer
Shares of USAP are up 109.5% in a year compared with the industry’s rise of 15.7% in the same period.
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Strong Q3 Results
In the third quarter, USAP posted robust results, with earnings doubling from the previous quarter and a notable 54% year-over-year growth in sales, totaling $71.3 million. The surge in premium alloy sales, driven by aerospace demand, contributed to the development of specialty alloys. Aerospace sales in the third quarter reached a record $53.9 million, constituting 75.6% of total sales and marking a significant 70.3% increase from the previous year’s quarter.
The company's gross margin demonstrated ongoing improvement in the quarter, reaching $10.9 million, or 15.2% of sales — the highest level since the second quarter of 2018. This positive trend was fueled by a favorable product mix and higher selling prices despite challenges from negative surcharge misalignment caused by declining commodity prices.
USAP is advancing in the commissioning phase of its capital project, integrating two Vacuum-Arc Remelt (VAR) furnaces into the North Jackson facility. Upon completion, this initiative is set to boost the company's capacity in premium and specialty alloys by 20%, facilitating the expansion of its portfolio with technologically advanced, higher-margin products — especially in applications within the aerospace market, including defense.
Universal Stainless & Alloy Products, Inc. Price and Consensus
Universal Stainless & Alloy Products, Inc. price-consensus-chart | Universal Stainless & Alloy Products, Inc. Quote
Other Key Picks
Some other top-ranked stocks in the Basic Materials space are Axalta Coating Systems Ltd. AXTA, sporting a Zacks Rank #1 (Strong Buy), and The Andersons Inc. ANDE and Alamos Gold Inc. AGI, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for AXTA’s current fiscal year earnings is pegged at $1.58, indicating year-over-year growth of 6.8%. AXTA beat the Zacks Consensus Estimate in three of the last four quarters and missed one, with the average earnings surprise being 6.7%. The company’s shares have rallied 15.7% in the past year.
The Zacks Consensus Estimate for ANDE’s current-year earnings has been revised 8.6% upward in the past 60 days. Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8% on average. ANDE’s shares have rallied around 36.5% in a year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 52 cents, indicating year-over-year growth of 85.7%. AGI beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have increased 39.8% in the past year.
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The Andersons, Inc. (ANDE) : Free Stock Analysis Report
Universal Stainless & Alloy Products, Inc. (USAP) : Free Stock Analysis Report
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Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
