Why Is Arconic (ARNC) Down 2.9% Since Its Last Earnings Report?

A month has gone by since the last earnings report for Arconic Inc. (NYSE:ARNC) . Shares have lost about 2.9% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to its next earnings release, or is ARNC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Arconic's Earnings and Sales Beat Estimates in Q4

Arconic reported net loss of $727 million or $1.51 per share for the fourth quarter of 2017, compared with net loss of $1,258 million or $2.91 per share a year ago.

Barring one-time items, adjusted earnings came in at 31 cents per share for the reported quarter, which beat the Zacks Consensus Estimate of 24 cents.

Arconic reported revenues of $3,271 million, up around 10.2% year over year. Sales also topped the Zacks Consensus Estimate of $3,070.5 million. Revenues were driven by improved volumes across all segments and higher aluminum prices.

Full-Year 2017 Results

For full-year 2017, Arconic reported net loss of $74 million or 28 cents per share, narrower than net loss of $941 million or $2.31 per share in 2016.

Revenues for the full year went up roughly 5% year over year to $13 billion.

Segment Highlights

EP&S: Revenues from the division came in at $1.5 billion in the fourth quarter, up 6% year over year, supported by increased aerospace volume in both airframes and engines.

GRP: The division recorded sales of $1.2 billion in the quarter, up 15% year over year, mainly driven by robust automotive volume.

TCS: The segment logged sales of $518 million, up 14% year over year on the back of increased volumes.

Financial Position

Arconic ended 2017 with cash and cash equivalents of roughly $2,150 million, up around 15.4% year over year.

Long-term debt went down 15.4% year over year to $6,806 million.

Outlook

Arconic issued its full-year 2018 guidance. The company expects revenues for 2018 in the range of $13.4-$13.7 billion. It also expects adjusted earnings in the range of $1.45-$1.55 per share and free cash flow to be around $500 million.

Arconic also initiated portfolio and strategy review, which is expected to be completed by the end of this year. The company also declared plans for an early debt reduction of about $500 million and a share repurchase program of up to $500 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

Arconic Inc. Price and Consensus

Arconic Inc. Price and Consensus | Arconic Inc. Quote

VGM Scores

At this time, ARNC has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Notably, ARNC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.