It has been about a month since the last earnings report for Allegheny Technologies (ATI). Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Allegheny Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
ATI’s Q2 Earnings Beat, Revenues Miss Estimates
ATI recorded a profit of $81.9 million or 58 cents per share in the second quarter of 2024 compared with the year-ago quarter's profit of $90.4 million or 62 cents.
ATI posted adjusted earnings of 60 cents, down 13% from the year-ago quarter’s figure of 69 cents. Adjusted earnings exceeded the Zacks Consensus Estimate of 58 cents.
The company’s net sales in the first quarter were $1,095.3 million, missing the Zacks Consensus Estimate of $1,104 million. Net sales were up around 5% year over year. ATI saw strong year-over-year sales growth in aerospace and defense.
Segment Highlights
HPMC reported sales of $562 million in the second quarter, up 6.6% year over year. However, the figure fell short of the consensus estimate of $588.9 million. HPMC's segment EBITDA rose 4% year over year to $113.8 million. The rise in segment EBITDA can be attributed to increased volumes on higher-margin, latest-generation commercial aerospace platforms.
AA&S recorded sales of $533.3 million, up approximately 3% from the prior year's figure of $518.9 million. The figure surpassed the consensus estimate of $513.6 million. The segment's EBITDA for the quarter was $87.5 million, up 18% year over year. Margins improved sequentially primarily driven by an improved sales mix, thanks to increased deliveries of titanium.
Financials
In second-quarter 2024, cash provided by operating activities amounted to $101 million compared with the previous year's figure of $68.1 million. The company's long-term debt was $1,854 million, up 9% from prior year’s levels.
Outlook
ATI's capabilities, long-term agreements and backlog enable the company to reaffirm its full-year outlook. Its clear strategy of leading in aerospace & defense and 'aero-like' markets keeps ATI on track to meet its 2024 guidance. The company expressed confidence in its ability to achieve the financial targets set for 2025 and 2027. ATI also highlighted the recent announcement of $4 billion in new sales commitments from the Farnborough International Airshow, predominantly for nickel alloys, which includes $550 million in revenues for 2027. This demonstrates that ATI remains on track to exceed $5 billion in revenues and $1 billion in adjusted EBITDA by 2027.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Allegheny Technologies has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allegheny Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Allegheny Technologies is part of the Zacks Steel - Speciality industry. Over the past month, Carpenter Technology (CRS), a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended June 2024 more than a month ago.
Carpenter reported revenues of $798.7 million in the last reported quarter, representing a year-over-year change of +5.4%. EPS of $1.82 for the same period compares with $0.78 a year ago.
Carpenter is expected to post earnings of $1.47 per share for the current quarter, representing a year-over-year change of +67.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +16.2%.
Carpenter has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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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 Nasdaq, Inc.
