Universal Stainless (USAP) Hits 52-Week High: What's Driving It?
Universal Stainless & Alloy Products, Inc.‘s USAP shares touched a fresh 52-week high of $17.50 on Nov 27, before closing at $17.05.
In the past year, Universal Stainless has gained 132.9% compared with the industry’s 15.1% rise in the same period.
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What’s Driving Universal Stainless?
In the third quarter, USAP reported strong financial results, with earnings doubling compared with the previous quarter’s levels and an impressive 54% year-over-year growth in sales, totaling $71.3 million. The surge in premium alloy sales, fueled by increased aerospace demand, played a significant role in the development of specialty alloys. Aerospace sales in the third quarter reached a record $53.9 million, contributing 75.6% to total sales and reflecting a substantial 70.3% increase from the same quarter the previous year.
The company's gross margin continued to show 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 driven by a favorable product mix and higher selling prices, overcoming challenges posed by negative surcharge misalignment resulting from declining commodity prices.
USAP is currently progressing through the commissioning phase of its capital project, which involves integrating two Vacuum-Arc Remelt (VAR) furnaces into the North Jackson facility. Upon completion, this initiative is expected to increase the company's capacity in premium and specialty alloys by 20%, enabling the expansion of its portfolio with technologically advanced, higher-margin products — particularly in applications within the aerospace market, including defense.
In the third quarter, USAP outperformed expectations by recording adjusted earnings of 20 cents per share, surpassing the Zacks Consensus Estimate of 15 cents. This marked the company's fourth consecutive quarter of positive earnings surprises, with an average beat of 44.4%. Looking ahead, the Zacks Consensus Estimate for USAP's 2023 earnings is pegged at 52 cents, indicating a year-over-year surge of 170.3%. Notably, the consensus estimate for the current year has seen a positive revision of 15.6% in the past 60 days, indicating the robust growth potential of the company.
Universal Stainless & Alloy Products, Inc. Price and Consensus
Universal Stainless & Alloy Products, Inc. price-consensus-chart | Universal Stainless & Alloy Products, Inc. Quote
Zacks Rank & Other Key Picks
USAP currently carries a Zacks Rank #2 (Buy).
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 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 6.67%. The company’s shares have rallied 20% in the past year.
The Zacks Consensus Estimate for ANDE’s current-year earnings has been revised upward by 5.1% 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 33.9% in a year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 53 cents, indicating year-over-year growth of 89.3%. 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 48.3% 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
