Century Aluminum to Report Q2 Earnings: Here's What to Expect

Century Aluminum Company Price and EPS Surprise

CENX’s Earnings Surprise History

CENX’s earnings missed the Zacks Consensus Estimate in each of the trailing four quarters, delivering a negative average surprise of 75.7%. 

What the Zacks Model Unveils for CENX

Our proven model does not conclusively predict an earnings beat for CENX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, but that is not the case here.

Earnings ESP: The Earnings ESP for CENX is 0.00%. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Zacks Rank: CENX currently has a Zacks Rank #5 (Strong Sell). 

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Have Shaped CENX's Q2 Performance

Century Aluminum's second-quarter performance is likely to have been supported by a favorable aluminum pricing environment, but investors may remain cautious about the sustainability and quality of the earnings improvement.  

The company projected adjusted EBITDA of $315-$335 million, up sharply from $231 million in the first quarter, primarily driven by higher realized aluminum prices and stronger regional premiums. Management estimated that favorable LME prices and delivery premiums would contribute roughly $85-$95 million to quarterly EBITDA, making commodity prices the dominant earnings driver. 

Higher input costs are likely to have prevented CENX from capturing the full benefit of stronger aluminum markets. The company expects raw-material inflation to reduce adjusted EBITDA by around $10 million, reflecting continued pressure from elevated prices for coke, pitch and caustic soda. 

It also noted that alumina costs remained under pressure because of geopolitical disruptions in the Middle East, highlighting that supply-chain risks and commodity inflation continued to weigh on margins despite stronger selling prices. These headwinds suggest that earnings growth remained highly dependent on favorable metal prices rather than improvements in operating efficiency. 

Century is likely to have faced elevated operating costs in the second quarter. While energy benefits of about $15 million are projected to support earnings, management expected a $15-$20 million drag from operating expenses and other items, with ongoing Mt. Holly expansion and Grundartangi restart activities affecting margins before delivering full production benefits. Benefits from the Grundartangi restart are expected to materialize mainly in the third quarter, suggesting only a limited contribution to second-quarter operating results. 

Although Century is likely to have benefited from stronger aluminum prices, improved premiums and higher production during the quarter, much of the expected earnings growth appears to be driven by favorable external market conditions. Persistent raw-material inflation, elevated operating costs, restart-related expenses and the company's high dependence on commodity prices could temper investor enthusiasm. 

CENX Stock’s Price Performance

Shares of CENX have surged 114.7% in the past year compared with the industry’s 26.5% growth. 

Image Source: Zacks Investment Research

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter: 

Avient Corporation AVNT, scheduled to release earnings on Aug. 6, has an Earnings ESP of +0.87% and carries a Zacks Rank #2. The consensus estimate for AVNT’s earnings for the second quarter is currently pegged at 89 cents.

Materion Corporation MTRN, slated to release earnings on Aug. 5, has an Earnings ESP of +5.39% and carries a Zacks Rank #2 at present. The consensus mark for MTRN’s second-quarter earnings is currently pegged at $1.55.

Albemarle Corporation ALB, scheduled to release earnings on Aug. 5, has an Earnings ESP of +2.21%. The Zacks Consensus Estimate for ALB's earnings for the second quarter is currently pegged at $3.35. ALB currently carries a Zacks Rank #3.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research