Titanium Metals Retained at Neutral - Analyst Blog


We maintain our Neutral recommendation on Titanium Metals Corporation ( TIE ). Its fourth-quarter 2011 earnings of 16 cents a share matched the Zacks Consensus Estimate. Revenues increased at a double-digit clip to $258.7 million, but missed the Zacks Consensus Estimate.

Sales were boosted by higher volumes across melted and mill products, led by improved demand for titanium products in the commercial aerospace sector. The company expects this trend to continue in 2012.

Titanium Metals witnessed increased demand in mill products in 2011. The company's commercial aerospace customers significantly increased their purchasing activity due to build rates for legacy and next-generation models and replenishment and growth of inventory to support the anticipated increase in future aircraft deliveries.

Titanium Metals is among the world's leading producers of titanium-melted products and mill products. It is the largest U.S. producer of titanium sponge, a key raw material used in the production of titanium melted and mill products.

Titanium Metals has been successful over the last several years in establishing significant flexibility and cost advantages in its entire manufacturing process. During the fourth quarter, the company acquired certain assets, intellectual property and know-how in order to enhance its production capacities and capabilities while extending its product technology.

Moreover, Titanium Metals' fiscal discipline and industry expertise have enabled it to manage its production rates and costs effectively while investing capital conservatively and maintaining a strong balance sheet. Moreover, the company's operating flexibility position it well to take advantage of opportunities for strengthening and expanding its presence in key markets.

However, we remain on the sideline given pricing pressure, competition, the cyclical nature of aerospace industry and the expected hike in raw material cost in 2012.

Titanium Metals is facing pricing pressure on mill products, which was evident from its 2011 results. Moreover, prices of major raw materials including titanium sponge are expected to rise in 2012.

Titanium Metals competes with Allegheny Technologies Inc. ( ATI ) and RTI International Metals, Inc. ( RTI ). The company currently has a Zacks #2 Rank, which translates to a short-term Buy rating.

ALLEGHENY TECH ( ATI ): Free Stock Analysis Report
RTI INTL METALS ( RTI ): Free Stock Analysis Report

TITANIUM METALS ( TIE ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ATI , RTI , TIE



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