Century Aluminum (CENX) reports second-quarter loss, delays revenue estimates

Century Aluminum (CENX) reported quarterly loss of $0.27 per share versus the Zacks Consensus Estimate of a loss of $0.22. This compares to a loss of $0.19 per share a year ago. The figure is adjusted for one-time items.

This quarterly report represents an earnings surprise of -22.73%. A quarter ago, it was expected that this aluminum producer would post a loss of $0.32 per share when it actually produced a loss of $0.54, representing a surprise of -68.75%.

Over the last four quarters, the company has beaten consensus earnings per share estimates only once.

Century, which belongs to the Zacks Metal Products – Procurement and Fabrication industry, posted revenues of $528 million for the quarter ended June 2021, missing the Zacks Consensus Estimate by 5.60%. This compares to the prior-year revenues of $401.9 million. The company has topped the consensus revenue estimate only once over the last four quarters.

The sustainability of current share price movements based on recently released data and future earnings expectations will depend primarily on management’s commentary following the earnings conference call.

Year to date, Century shares are up about 35.1%, while the S&P 500 is up 17.8%.

What’s next for Century?

While Century has outperformed the market so far this year, investors are wondering: What’s next for this stock?

There are no easy answers to this key question, but one reliable indicator that can help investors address this is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the coming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings report, the estimate revisions trend for Century was unfavorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. Thus, the stock is expected to underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the upcoming quarters and current fiscal year change in the coming days. The current consensus EPS estimate is $0.86 on $639.5 million in revenue for the coming quarter and $1 on $2.29 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the industry can also have a significant impact on stock performance. In terms of the Zacks Industry Rank, Metal Products – Procurement and Fabrication is currently in the bottom 15% of the 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

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