Specialty steel company
) is set to release its fourth-quarter 2013 results before the
opening gong on Jan 22. In the last quarter, the
Pennsylvania-based company racked up a 3.57% positive earnings
surprise. Let's see how things are shaping up for this
Factors to Consider this Quarter
Allegheny is contending with weak pricing and raw material cost
pressure. Reduced raw material surcharges and low base prices of
standard stainless products hurt the results of its key
Flat-Rolled Products segment in the September quarter and might
do the same in the fourth quarter. Weak demand and increased
Asian imports are contributing to lower stainless steel sheet
Demand for Allegheny's standard stainless products has been hit
by rapidly falling raw material surcharges, resulting in
customers delaying purchases. In addition, the same factors
appear to be influencing short-term demand for some high-value
products from some key end-markets as many customers are being
cautious and keeping inventories lean.
Weak demand from jet engine aftermarket and nuclear energy is
expected to continue to affect Allegheny's results. Demand for
forging from construction and mining markets also remains soft.
Allegheny does not see any significant improvement in global
demand in the Flat-Rolled Products segment in the near term due
to the lack of mega projects. A challenging business environment
(given the U.S. fiscal policy issues) is expected to affect the
company's results in the December quarter and potentially in
Our proven model does not conclusively show that Allegheny will
beat the Zacks Consensus Estimate in the fourth quarter. That is
because a stock needs to have both a positive
(Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for
this to happen. That is not the case here, as you will see below.
Negative Zacks ESP:
ESP for Allegheny is -31.58%. That is because the Most Accurate
estimate stands at a loss of 25 cents while the Zacks Consensus
Estimate is pegged at a loss of 19 cents.
Zacks Rank #5 (Strong Sell):
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies operating in the basic materials
sector you may want to consider as our model shows they have the
right combination of elements to post an earnings beat this
Companhia Siderurgica Nacional
) has earnings ESP of +11.11% and carries a Zacks Rank #1 (Strong
Denison Mines Corp.
) has earnings ESP of +50.00% and holds a Zacks Rank #2 (Buy).
) has earnings ESP of +4.69% and holds a Zacks Rank #3
ALLEGHENY TECH (ATI): Free Stock Analysis
DENISON MINES (DNN): Free Stock Analysis
CIA SIDERUR-ADR (SID): Free Stock Analysis
TERNIUM SA-ADR (TX): Free Stock Analysis
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