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Century Aluminum (CENX) Q2 Earnings: What's in the Cards?

Zacks Equity Research
Updated

Century Aluminum Company CENX is scheduled to report second-quarter 2018 results on Aug 1, after the closing bell.

In the last reported quarter, the company reported a loss of $0.3 million compared with a loss of $15.1 million in the year-ago quarter. On a reported basis, the company delivered break-even results compared with a loss of 17 cents per share in the prior-year quarter. Adjusted loss of 4 cents in the quarter was narrower than the Zacks Consensus Estimate of a loss of 23 cents.  

Revenues rose around 5% year over year to $454.5 million, topping the Zacks Consensus Estimate of $437 million.

Notably, Century Aluminum beat the Zacks Consensus Estimate in two of the trailing four quarters, with an average negative earnings surprise of 8.9%.

Shares of Century Aluminum have lost 26% in past three months, against the 8.7% rise of the industry.


 

Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

Factors at Play

During first-quarter earnings call, the company stated that it is witnessing strong industry fundamentals and impressive demand growth in most global regions. The company continues to expect significant opportunity in the U.S. market over the coming years, along with limited tariffs exemptions.

Consolidated revenues for the second quarter is expected to increase around 18% year over year as the Zacks Consensus Estimate is currently pegged at $459 million.

Century Aluminum expects realized alumina price to fall to $382 per ton in the second quarter from $435 in the last reported quarter. This expected decline is likely to boost its margins in the second quarter. Moreover, it witnessed meaningful improvements in regional premium and LME prices, which is likely to support EBITDA in the second quarter. Overall, it expects realized alumina costs and changes in the selling prices to benefit EBITDA by $40 million in the to-be-reported quarter.

The company’s move to restart the Hawesville plant, which is expected to realize first sales toward the end of second quarter, can have a negative impact on EBITDA due to associated training and labor costs. Century Aluminum is likely to spend roughly $20-million cash related to the Hawesville restart, which will be reflected in the upcoming results.

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Century Aluminum Company Price and EPS Surprise

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

Earnings Whispers

Our proven model does not show that Century Aluminum is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Earnings ESP: Earnings ESP for Century Aluminum for the second quarter is 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Century Aluminum currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.  

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Welbilt, Inc. WBT has an Earnings ESP of +0.54% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.

Emerson Electric Co. EMR has an Earnings ESP of +0.15% and holds a Zacks Rank #3.  

SiteOne Landscape Supply, Inc. SITE has an Earnings ESP of +0.97% and holds a Zacks Rank #3.

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Emerson Electric Co. (EMR) : Free Stock Analysis Report
 
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SiteOne Landscape Supply, Inc. (SITE) : Free Stock Analysis Report
 
Welbilt, Inc. (WBT) : Free Stock Analysis Report
 
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