Arconic Issues Soft 1Q Results as EPS Segment Continues to Struggle; We See Long-Term Upside
Arconic shares traded sharply lower after the company reported disappointing first-quarter earnings. Two key factors emerged. First, higher aluminum prices provided a significant profit headwind. Second, the engineered products and solutions segment continued to sputter, and margin expansion does not appear imminent. Having updated our valuation model, we've tempered our near-term profit forecast, but our long-term outlook remains intact. Accordingly, we've lowered our fair value estimate to $23...Arconic is engaged in lightweight metals engineering and manufacturing. The company's segments include: Engineered Products and Solutions, which produces products that are used mainly in the aerospace (commercial and defense), industrial, commercial transportation, and power generation end markets; Global Rolled Products, which produces aluminum sheet and plate for a variety of end markets, and also produces aseptic foil for the packaging end market; and Transportation and Construction Solutions, which produces products that are used in the commercial transportation and nonresidential building and construction end markets, and also produces aluminum products for the industrial products end market.
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