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Will Century Aluminum Post a Larger-Than-Expected Loss in 3Q15?

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Century Aluminum in 3Q15

Century Aluminum (CENX) is expected to release its 3Q15 financial results on October 29, 2015. Earnings season for the aluminum industry has started on a dull note, with industry leader Alcoa (AA) missing Wall Street estimates.

The markets punished Alcoa for its worse-than-expected earnings, sending its stock down 6.8% after the earnings release. Together, Alcoa and Ball Corporation (BLL) form ~4% of the Materials Select Sector SPDR ETF (XLB).

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Volatility

Century Aluminum has generally been quite volatile in the earnings season. Its share price rose ~13% after its 1Q15 earnings release. However, the stock fell by a similar amount after CENX’s 4Q14 financial results.

Market reaction to Century Aluminum’s 2Q15 earnings was even more severe. CENX stock fell ~40% intraday after the company released its 2Q15 earnings. Century Aluminum reported a net loss of $33.9 million in 2Q15. In contrast, it posted net income of $73.8 million in 1Q15.

While analyzing Century Aluminum’s 2Q15 earnings, we noted that markets might be overreacting to the company’s earnings. The stock did bounce back more than 20% the next day.

Stock price has been weak

As we’ve already seen this year, any bounce-back in commodity (DBC) shares has been short-lived. The graph above shows the stock market performance of aluminum companies in 2015. Year-to-date, Century Aluminum has lost more than 80%, making it among the worst performing companies in this space.

Constellium NV (CSTM), a leading aluminum fabricator, is not far behind, losing more than 75% of its market capitalization this year.

Analysts expect Century Aluminum to post a loss in 3Q15. In the next part, we’ll explore analyst estimates and recommendations for Century Aluminum.

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