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Why Is Arconic (ARNC) Up 0.8% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Arconic (ARNC). Shares have added about 0.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Arconic due for a pullback? 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.

Arconic Trails Earnings and Sales Estimates in Q4

Arconic recorded net income (as reported) of $309 million or 70 cents per share in fourth-quarter 2019, up from $218 million or 44 cents in the prior-year quarter.

Barring one-time items, adjusted earnings per share (EPS) came in at 53 cents. The figure trailed the Zacks Consensus Estimate of 54 cents.

Revenue fell 2% year over year to $3,401 million and missed the Zacks Consensus Estimate of $3,469 million.

Organic revenue inched up 1% year over year on the back of favorable product pricing and growth in the packaging, aerospace as well as industrial markets. However, this was significantly offset by softness in commercial transportation, automotive as well as building and construction markets.

2019 Highlights

In 2019, total revenue rose 1% year over year to $14.2 billion and organic revenue rose 7%.

Net income came in at $470 million or $1.03 per share in 2019, down from $642 million or $1.30 per share in 2018.

Segment Highlights

EP&F: Revenue in the division totaled $1.7 billion in the fourth quarter, up 1% year over year. Organic revenue in the segment rose 2%, supported by volume growth in aerospace that were partly offset by softness in commercial transportation.

GRP: Revenue in the division amounted to $1.7 billion in the reported quarter, down 5% year over year. Organic revenue in the segment were flat on a year-over-year basis.

Financial Position

As of Dec 31, 2019, Arconic had cash and cash equivalents of $1,648 million, down 27.6% year over year. Long-term debt fell 16.8% year over year to $4,906 million.

Adjusted free cash flow in 2019 nearly doubled year over year to $815 million from $465 million.

Outlook

Arconic has issued guidance for full-year 2020.

The company expects sales in the range of $13.9-$14.2 billion. Adjusted EPS for 2020 is projected in the band $2.22-$2.42. Moreover, it expects adjusted free cash flow to be between $800 million and $900 million for 2020.

Arconic also expects adjusted EPS for first-quarter 2020 in the range of 47-53 cents.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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