Arconic (ARNC) Shares Surge 87% YTD: What's Behind The Rally?
Zacks Investment Research | Dec 18, 2019 07:01AM ET
Shares of Arconic Inc. (NYSE:ARNC) have shot up 86.7% so far this year. The company has also outperformed its industry ’s rise of roughly 34.7% over the same time frame. Moreover, it has trounced the S&P 500’s gain of 27.2% year to date.
Arconic has a market cap of roughly $14 billion. Average volume of shares traded in the last three months was around 2,949.4K.
Let’s take a look at the factors that are driving this Zacks Rank #2 (Buy) stock.
What’s Going in ARNC’s Favor?
Upbeat outlook and strong growth prospects have contributed to the run-up in Arconic’s shares. The company, in November, raised its earnings guidance for full-year 2019. Arconic now expects adjusted earnings in the range of $2.07-$2.11 per share for 2019, up from its earlier expectation of $1.95-$2.05 per share. The revised guidance partly reflects the benefits of its cost reduction actions.
The trend in earnings estimate revisions also indicates a solid earnings outlook for Arconic. Over the past three months, the Zacks Consensus Estimate for 2019 has increased by 6.5%. The Zacks Consensus Estimate for fourth-quarter 2019 has also moved up roughly 8% over the same timeframe.
Growth prospects for Arconic also look encouraging. The Zacks Consensus Estimate for earnings for 2019 is currently pegged at $2.13 per share, reflecting an expected year-over-year growth of 56.6%. The same for the fourth quarter stands at 51 cents, indicating a year-over-year growth of 63.6%.
Arconic is gaining from demand strength in automotive and aerospace markets. The company is seeing healthy demand in aero engines and aero defense markets with double digit growth in organic revenues as witnessed in the third quarter. Volume gains in the commercial transportation market is also contributing to its organic revenue growth. Strength across these key markets is expected to support the company’s full-year revenues.
Moreover, Arconic is focused on cost reduction and operational improvements across its businesses, which should drive its bottom line in 2019. The company has raised the annualized cost reduction commitment to roughly $280 million on a run-rate basis, from its prior expectation of $260 million. It expects to capture around $180 million of savings in 2019, also up from earlier commitment of $140 million.
Get The News You Want
Arconic Inc. Price and Consensus
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.