Century Aluminum’s 2Q15 Earnings: Is the Market Overreacting?



Century Aluminum’s 2Q15 earnings

Century Aluminum’s 2Q15 earnings unleashed a selling spree on Wall Street. The company’s share price fell ~40% intraday and finally closed at $5.18 on August 7—down 36.98% from its previous day’s closing. The company reported a net loss of $33.9 million in the quarter. In contrast, Century Aluminum had posted net income of $73.8 million in 1Q15.

Volatility around an earnings release is nothing new for Century Aluminum (CENX). Its share price had climbed ~13% after its 1Q15 earnings release. However, the stock had fallen by a similar amount after CENX’s 4Q14 financial results.

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Series overview

In this series, we’ll take a close look at Century Aluminum’s 2Q15 earnings. We’ll explore what factors prompted such a negative reaction to its share price after its 2Q15 earnings release. We’ll also analyze whether the markets overreacted to Century Aluminum’s 2Q15 earnings.

Century Aluminum has lost ~78% of its market capitalization since the beginning of 2015, as you can see in the chart above. The 2Q15 loss only added fire to the carnage. 2015 hasn’t treated the base metals sector well. Even Alcoa (AA) has traded weakly, losing 38% so far in the year.

Together, Alcoa and Reliance Steel & Aluminum (RS) form ~10.1% of the SPDR S&P Metals and Mining ETF (XME).

About Century Aluminum

Century Aluminum was formed in 1995 by Glencore International. Glencore (GLNCY) is one of the world’s largest diversified natural resource companies and a major producer and marketer of more than 90 commodities worldwide.

In the next part of this series, we’ll look at Century Aluminum’s 2Q15 earnings in detail.


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