Yahoo Finance Kaiser Aluminium (KALU) Gains 34% in 3 Months: More Room to Run?
Shares of Kaiser Aluminium KALU have gained 33.8% in the past three months, faring way better than the industry, which recorded 9.5% growth. The Industrial Products sector has meanwhile dipped 0.4% while the Zacks S&P 500 composite has moved up 4.8% in the same timeframe.
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KALU has a market capitalization of around $1.6 billion and currently sports a Zacks Rank #1 (Strong Buy).
Kaiser Aluminum’s shares have been on an uptrend since it reported better-than-expected first-quarter results on Apr 24. Adjusted earnings per share of $1.02 marked a 143% year-over-year improvement. This is commendable, considering that the company’s revenues declined 9% year over year in the quarter. The decline in revenues was attributed to a fall in the average selling price due to a 14% decrease in the hedged cost of alloyed metal. The company also witnessed a 3% reduction in shipments, which was partially offset by a 2% increase in conversion revenue per pound.
Net sales for the aerospace/high-strength applications were $221 million and conversion revenues were $137 million, reflecting a 12% increase year over year. The improvement reflects higher pricing, along with growth in shipments, driven by demand for diversified applications. Net sales for general engineering applications were $153 million and conversion revenues were $80 million, reflecting a modest year-over-year increase on a 2% rise in shipments.
Sales for general engineering applications rebounded from depressed levels in the second half of 2023. Net sales for packaging applications were $298 million and conversion revenues were $118 million, reflecting an 11% decrease year over year mainly owing to a 7% reduction in shipments of higher-priced coated food products driven by destocking during the first quarter.
Adjusted EBITDA margin was 17.0% compared with 12.7% in the first quarter of 2023. The improvement in earnings and EBITDA margins was driven by lower manufacturing costs and the company’s efforts to control costs and improve operating efficiencies.
The company expects demand improvement across the majority of its end markets throughout 2024. KALU expects conversion revenues to improve 2 - 3% and adjusted EBITDA margins to improve in the range of 70 - 170 basis points from 2023 with the implementation of cost reduction measures in operations, increase in manufacturing efficiencies and pursuit of strategic growth initiatives.
Kaiser Aluminium maintains its long-term target of conversion revenues of around $2 billion and EBITDA margin in the mid-to-high 20%.
The company recently reported that it had effectively witnessed a 4% year-over-year reduction in total estimated Scope 1 and 2 greenhouse gas (GHG) absolute emissions due to increased manufacturing efficiency and lower Scope 2 emissions. It is on track to achieve its 2030 GHG emissions intensity reduction targets for Scope 1, 2 and 3.
Kaiser Aluminium is making continued progress to lower reliance on electricity from coal-fired power sources and gain access to lower carbon electricity sources.
Other Stocks to Consider
Some other top-ranked stocks from the Industrial Products sector are Intellicheck, Inc. IDN, Lakeland Industries LAKE and Valmont Industries VMI. Each of these stocks sport a Zacks Rank of 1. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Intellicheck’s 2024 earnings is pegged at 2 cents per share. The consensus estimate for earnings has remained unchanged in the past 60 days. The estimate indicates year-over-year growth of 125%. The company has a trailing four-quarter average earnings surprise of 28.9%. IDN shares have gained 81.7% in the past three months.
Lakeland Industries has an average trailing four-quarter earnings surprise of 22.10%. The Zacks Consensus Estimate for LAKE’s 2024 earnings is pinned at $1.75 per share, which indicates year-over-year growth of 63.6%. Estimates have moved 39% north in the past 60 days. The company’s shares have gained 19% in the past three months.
The Zacks Consensus Estimate for Valmont Industries’ 2024 earnings is pegged at $15.94 per share. The consensus estimate for earnings has gone up 7% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 13%. VMI shares have gained 21.1% in the past three months.
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