According to consensus estimates compiled by Thomson Reuters, Arconic (ARNC) has a one-year price target of $29.17. Based on Arconic’s June 19, 2017, closing prices, it represents a 9.6% upside. Of the eight analysts covering Arconic, three have given the stock a “buy” or equivalent rating, while the remaining five have given it a “hold.”
Arconic was listed as a separate entity on November 1, 2016, when Alcoa split into two new entities—Arconic and Alcoa (AA). However, after the split, Arconic was involved in a bitter corporate battle with its largest shareholder, Elliott Management. The battle has now been resolved with the removal of Arconic’s CEO (chief executive officer) Klaus Kleinfeld and more representation for Elliott on Arconic’s board of directors.
Arconic reported better-than-expected earnings in 1Q17. It posted revenues of $3.2 billion, a 4.5% rise YoY (year-over-year). Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 11.0% YoY to $485.0 million. It posted an adjusted EBITDA margin of 15.2% in 1Q17 compared to 14.3% in the corresponding quarter last year.
Arconic is expected to post revenues of $3.2 billion in 2Q17. Its 2Q17 EBITDA is expected to be similar to 1Q17. Arconic is working to expand its EBITDA margins by a mix of productivity measures as well as exiting its lower margin businesses (WWD) (ITA).
In the next part, we’ll see how analysts are rating Century Aluminum (CENX).