In This Article:
Allegheny Technologies Incorporated’s ATI stock looks promising at the moment. The stock has gained roughly 12.3% year to date, outperforming the industry’s growth of around 9.6%.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make Allegheny an attractive investment option.
What’s Working in Favor of ATI?
Solid Rank & VGM Score: Allegheny currently sports a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Positive Surprise History: Allegheny has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 42.7%.
Strong Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Allegheny is currently pegged at $1.63, reflecting an expected year-over-year growth of a whopping 239.6%. Moreover, earnings are expected to register a 35.4% growth in 2019.
Upbeat Outlook: Allegheny expects year-over-year growth in operating margin and revenues in its High Performance Materials & Components (HPMC) division in the second half of 2018 on the back of improved asset utilization and growth in aerospace market demand.
Moreover, Allegheny envisions strong end-market demand in the Flat-Rolled Products (FRP) unit to continue and benefit from current operational improvements. It also sees growth in differentiated products and benefits from the A&T Stainless joint venture (JV).
The company also continues to expect strong second-half cash generation with at least $150 million of free cash flow for 2018, which excludes contributions to the ATI Pension Plan.
Allegheny’s JV with Tsingshan Group Company will also offer cost competitive stainless sheet products made for the North American market through a unique combination of Allegheny’s innovative, low-cost Hot-Rolling and Processing Facility (HRPF) and Tsingshan’s unparalleled Indonesian refining, mining and castings assets, and the JV’s unique Direct Roll Anneal and Pickle facility in Midland, PA.
The JV supports Allegheny’s considerable investment in the U.S. manufacturing operations, especially its HRPF facility, which will provide value addition to the processing services for the JV’s finished products.