Previously, we looked at analysts’ estimates for Century Aluminum’s (CENX) 4Q16 earnings. In this article, we’ll analyze how analysts are rating Century Aluminum leading up to its 4Q16 earnings.
According to consensus estimates compiled by Thomson Reuters, Century Aluminum has a mean one-year price target of $10.20, which represents a 33.1% downside over its February 17, 2017, closing price. In contrast, Norsk Hydro (NHYDY) is trading 7.1% above its consensus one-year price target, and Alcoa (AA) is trading 8.3% below its consensus one-year price target.
Century Aluminum has received “hold” ratings from all five analysts polled by Thomson Reuters. In comparison, Norsk Hydro has a “buy” or equivalent rating from 32% of the analysts polled by Thomson Reuters, while 36% of analysts have rated the stock as a “hold.” The remaining 32% of analysts have rated Norsk Hydro as a “sell” or equivalent.
Alcoa has a “buy” or equivalent rating from 57% of analysts surveyed by Thomson Reuters, and the remaining analysts have rated the stock as a “hold.” No analyst have given Alcoa “sell” ratings.
There are several metrics that can be used to value a company. However, for commodity companies (RIO) (BHP), the EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple is the preferred valuation metric.
Century Aluminum’s valuation multiples have soared over the last few months. The stock is trading at a generous forward multiple of 53x. In contrast, Alcoa is trading at 5.4x its forward EBITDA. Norsk Hydro is trading at 7.5x its forward expected EBITDA.
Don’t forget to check out Market Realist’s Aluminum page for a detailed post-earnings analysis of Century Aluminum’s 4Q16 results.