An investor’s guide to Constellium’s 3Q14 earnings

Constellium (CSTM) released its 3Q14 earnings on November 19, 2014. It reported an earnings per share (or EPS) of 0.11 Euros. The revenues in 3Q were 927 million Euros, up 8% over the corresponding quarter last year.

Stock markets were not impressed with these results, and the stock tanked nearly 20%. Constellium made a new 52-week low after its 3Q14 results. Interestingly, Century Aluminum Company (CENX) touched its 52-week high after its 3Q14 earnings. Alcoa’s (AA) 3Q14 earnings were also better than the street expectations. Alcoa is the largest aluminum company in the United States.

Rising aluminum premiums negatively impacted Constellium’s 3Q14 profits, unlike primary producers such as Rio Tinto (RIO) and Alcoa (AA). Primary producers have posted higher profits on the back of rising aluminum premiums. Aluminum premium is an additional cost that aluminum buyers have to pay in excess of prevailing aluminum prices. You can learn more about aluminum pricing mechanism in the Market Realist article Must-know: Aluminum pricing and how it’s distorted by companies.

Looking at the share market performance, Constellium has lagged other aluminum plays this year, as seen in the above chart. The share price of Century Aluminum (CENX) has almost tripled this year. Alcoa’s share price is also up ~60% since the start of this year. Currently, both Alcoa and Century Aluminum are part of the Standard and Poors depositary receipt (or SPDR) S&P Metals and Mining exchange-traded fund (or ETF) (XME).

In this series, we will analyze in detail Constellium’s (CSTM) 3Q14 results and analyze why its share price was hammered after those results. We will also discuss the outlook for Constellium.

In the next part, we’ll look at Contellium’s (CSTM) key operations.