ARNC
Arconic Corporation
Industrial/Transportation
09/07/2022
Presented
| Date | 08/31/2022 |
| Price | $25.21 |
| Market Cap | $2.59B |
| Ent Value | $4.56B |
| P/E Ratio | 20.53x |
| Book Value | $17.16 |
| Div Yield | 0% |
| Shares O/S | 102.66M |
| Ave Daily Vol | 897,155 |
| Short Int | 3.84% |
Current
| Price | $29.99 |
| Market Cap | $3.01B |
| Arconic Corp. engages in manufacturing of aluminum sheet, plate, extrusions and architectural products. It operates through the following business segments: Rolled Products, Extrusions, and Building and Construction Systems. The Rolled Products segment engages in the production of finished goods ranging from airframes and automotive body panels to industrial plate and brazing sheet. The Extrusions segment produces a range of extruded products, including aerospace shapes automotive shapes, seamless tube, hollows, mortar fins and high strength rod and bar. The Building and Construction Systems segment manufactures differentiated products and building envelope solutions, including entrances, curtain walls, windows, composite panel and coil coated sheet. The company was founded on August 14, 2019 and is headquartered in Pittsburgh, PA. |
Publicly traded companies mentioned herein: Alcoa Corp (AA), Arconic Corp (ARNC), Ball Corp (BLL), Constellium SE (CSTM), Crown Holdings Inc (CCK), Hindalco Industries Ltd (HNDL IN), Howmet Aerospace Inc (HWM), Kaiser Aluminum Corp (KALU), Norsk Hydro ASA (NOHA GR), UACJ Corp (5741 JP)
Highlights
The presenter is long shares of Arconic Corp (ARNC), a manufacturer and seller of aluminum sheets, plates, extrusions, and architectural products that was spun out of Alcoa Corp in 2016 and was later separated from the aerospace business (now Howmet Aerospace Inc) in 2020. ARNC has 63% exposure to the US and is insulated from aluminum pricing volatility since it passes pricing through to customers and earns a premium on the products it manufactures. COVID- and supply chain-related slowdowns in the production of automotives, planes, and machinery have impacted the business, but these headwinds are starting to inflect positively and should benefit ARNC over the next few years as supply chain disruptions unwind. The presenter models 2025 EBITDA generally in line with the Street, at which point he thinks the stock would have a 26% FCF yield based on the current $25 share price ($4B EV, $2.6B market cap). Given the company’s strong margins, FCF conversion, and balance sheet relative to peers, he expects the valuation gap to narrow over that timeframe and underwrites a 6.5x 2025 EBITDA multiple to reach a $52 price target absent of share buybacks.
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