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Will Century Aluminum's (CENX) Earnings Beat Estimates in Q1?

Century Aluminum Company CENX is scheduled to report first-quarter 2018 results after the closing bell on May 3.

 

The company logged a profit of $35.8 million or 37 cents per share in fourth-quarter 2017 as against loss of $168.5 million or $1.93 per share it reported in the year-ago period. The results in the quarter were aided by a non-cash gain of $7.3 million associated with the termination of certain legacy contractual obligations. The company also benefited from cost-management actions, stable operations and favorable operating metrics.

 

Century Aluminum’s adjusted earnings were 26 cents per share in the fourth quarter, which topped the Zacks Consensus Estimate of 23 cents.

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The company registered revenues of $434 million in the quarter that surpassed the Zacks Consensus Estimate of $427 million.

 

Century Aluminum has outperformed the Zacks Consensus Estimate in two of the trailing four quarters while missing in the other two, with an average negative earnings surprise of 12.9%.

 

Shares of Century Aluminum have moved up 28.3% in past six months, outperforming the 18.5% decline of its industry.

 

 

 

 

Let’s see how things are shaping up for this announcement.

 

Factors to Consider

 

Century Aluminum saw higher raw material costs in the fourth quarter and expects this trend to continue in the first quarter of 2018. However, the scenario is expected to start improving from the second quarter. Demand for primary aluminum and aluminum products remains good and the company expects this environment to continue for the foreseeable future.

 

Century Aluminum is also investing to upgrade its product mix across the plants and is also investigating the restart of capacity at the Hawesville facility. The company believes that it is well placed to serve customers amid the prevailing market environment and deliver attractive returns to its shareholders.

 

The company should benefit from favorable market fundamentals and demand for aluminum across key markets. According to the company, global aluminum demand rose roughly 6% year over year in the fourth quarter of 2017. Century Aluminum also witnessed 7%, 4% and 2% demand growth on a year-over-year basis across China, Europe and North America, respectively, in the quarter.

 

Century Aluminum is also implementing a number of actions to control costs. The company benefited from cost management actions in the fourth quarter and these initiatives are expected to continue to support its bottom line in the first quarter of 2018.

 

Century Aluminum is also expected to continue to gain from higher London Metal Exchange (“LME”) prices. The company’s adjusted EBITDA improved roughly six times from $29 million in 2016 to $164 million in 2017, aided by its cost-management actions and increased LME prices. Higher LME pricing and regional premiums also led to a roughly 20% year-over-year rise in sales in 2017. The company expects LME and regional premiums to improve EBITDA by around $10 million in first-quarter 2018.

 


Century Aluminum Company Price and EPS Surprise

 

Century Aluminum Company Price and EPS Surprise | Century Aluminum Company Quote

 

Earnings Whisper

 

Our proven model conclusively shows that Century Aluminum is likely to beat estimates this quarter because it has the right combination of two key ingredients. 

 

Zacks ESP: Century Aluminum has an Earnings ESP of +29.41%. This is because the Most Accurate estimate stands at a loss of 16 cents while the Zacks Consensus Estimate is pegged at a loss of 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Zacks Rank: Century Aluminum carries a Zacks Rank #3 (Hold), which when combined with a positive ESP, makes us confident of an earnings beat. Note that stocks with — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 — have significantly higher chance of beating earnings estimates.  

 

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

 

Other Stocks to Consider

 

Here are some other companies in the industrial product space that you may consider as our model shows they too have the right combination of elements to deliver an earnings beat this quarter:

 

Rexnord Corporation RXN has an Earnings ESP of +1.82% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Sun Hydraulics Corporation  SNHY has an Earnings ESP of +0.55% and carries a Zacks Rank #2.  

 

Alarm.com Holdings, Inc. ALRM has an Earnings ESP of +5.44% and carries a Zacks Rank #3.  

 

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