Universal Stainless (USAP) Rallies 35% in 3 Months: Here's Why
Universal Stainless & Alloy Products, Inc.‘s USAP shares have rallied 35% in the last three months. Owing to the upside, the stock outperformed its industry’s fall of 2% over the same time frame. The company has topped the S&P 500’s nearly 1.6% rise over the same period.
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Let’s look at the factors driving this Zacks Rank #2 (Buy) stock.
What’s Driving Universal Stainless?
In the third quarter, USAP reported robust financial performance, with earnings doubling from the previous quarter’s figure and an impressive 54% year-over-year growth in sales, reaching $71.3 million. The upswing in premium alloy sales, driven by increased aerospace demand, played a pivotal role in advancing specialty alloy development. Aerospace sales in the third quarter achieved a record high of $53.9 million, contributing 75.6% to total sales and surging 70.3% from the prior-year quarter’s levels.
The company's gross margin continued to exhibit improvement, 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, effectively overcoming challenges posed by negative surcharge misalignment resulting from declining commodity prices.
USAP is 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 anticipated 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 — particularly in aerospace applications, including defense.
In the third quarter, USAP exceeded expectations by reporting 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%. The Zacks Consensus Estimate for USAP's 2023 earnings is pegged at 52 cents, suggesting a remarkable year-over-year surge of 170.3%. The consensus estimate for current-year earnings experienced a positive revision of 15.6% in the past 60 days, underscoring 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
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 6.7%. The company’s shares have increased 23.1% 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 48.9% in a year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 53 cents, indicating a year-over-year surge 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 surged 43.1% 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
Alamos Gold Inc. (AGI) : Free Stock Analysis Report
Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
