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



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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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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