Follow Century Aluminum Company to never miss an important update.
The U.S. administration is pushing for Canadian companies to move operations south of the border while defending the use of tariffs. This escalation in trade friction typically benefits domestic metal producers by making imported aluminum more expensive for U.S. buyers.
As the largest producer of primary aluminum in the U.S., Century stands to gain if trade barriers limit competition from Canadian rivals. While these disputes can be volatile, they reinforce the company's position as a critical domestic supplier for industries that want to avoid import taxes.
UBS established a $60 price target for the stock, which is higher than the current price of about $47 but lower than the average analyst target of $71. This move reflects a cautious but positive outlook on the company's ability to profit from current metal prices. While price targets are just estimates of where a stock might trade in a year, this call suggests that professional analysts see the company as undervalued compared to its earnings potential.
Source: UBS
Century earned $2.46 per share last quarter, topping the $2.33 analysts expected. While revenue of $752 million was slightly lower than the $820 million forecast, the company made up for it with better efficiency and a $94 million tax credit refund for domestic manufacturing.
The most important development for long-term owners is that the company now has more cash on hand than it owes in total debt. This financial strength provides a safety net for the business as it prepares to build the first new U.S. aluminum smelter in 45 years. Management also successfully restarted production lines in South Carolina and Iceland, which should help increase the amount of metal available to sell in the coming months.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Century has brought its Mt. Holly plant in South Carolina to full production capacity, a move the company says was made possible by trade policies that protect domestic metal from cheaper imports. This restart has added over 100 jobs and increased the company's total U.S. output by about 10 percent.
Running at full capacity is critical for an aluminum smelter because these plants have high fixed costs for electricity and equipment. By spreading those costs over more tons of metal, Century can lower its cost per pound and earn more profit on every sale.
Management had a long run of missing their own targets, but a recent big jump in profits suggests the business is finally catching up to their forecasts.
| Expectation | |
|---|---|
| EPS | $2.65 |
| Revenue | $968M |
Follow Century Aluminum Company to get the latest and most important updates.
Follow CENX