CENX: Power Agreement Extension and 50% Tariff Support Will Drive Future Gains

Analysts have reaffirmed Century Aluminum's fair value target at $36.00, citing improving profit margins and favorable aluminum market conditions as key factors that support their outlook.

Analyst Commentary

Analyst opinions regarding Century Aluminum's prospects reflect a careful balance of optimism about the company’s positioning in the current market environment and caution around certain industry trends.

• Bullish analysts highlight recent upward revisions in price targets, indicating strong confidence in Century Aluminum's ability to capitalize on favorable aluminum market dynamics.
• Improvements in global aluminum prices, particularly driven by sustained demand from China, have outpaced prior expectations and are seen as supporting continued revenue growth.
• The company is viewed as a direct beneficiary of ongoing tariffs on aluminum imports, which help maintain a competitive pricing environment and support domestic profitability.
• Updates to forward-looking curves for aluminum strengthen the argument that Century Aluminum could outperform valuation benchmarks if current conditions persist.

• Bearish analysts note that despite international strength, business momentum in the US and EU has been weak. This divergence could challenge Century Aluminum’s global performance and execution.
• There is caution that recent support from tariffs may not be permanent, which could expose margins to future policy changes or increased competition from imports.
• Valuation upgrades depend heavily on continued robust demand and elevated pricing, with any downturn in global markets likely to pressure future expectations.

What's in the News

• Century Aluminum signed a power agreement extension with Santee Cooper to secure stable electricity for its Mt. Holly smelter through 2031. This agreement paves the way to restart idle capacity and create over 100 new jobs. Full production is targeted by early summer 2026.
• President Trump reversed a Biden-era rule on copper smelter emissions and granted a two-year exemption for compliance to affected companies, including those in the aluminum sector such as Century Aluminum. (Reuters)
• An electrical equipment failure at Century Aluminum's Grundartangi plant led to the announcement of a temporary reduction of production capacity to one-third. There is no current estimate for full restoration.

Valuation Changes

• Fair Value Target remains unchanged at $36.00 per share.
• Discount Rate has risen slightly to 8.57% from 8.53%.
• Revenue Growth expectation is steady at 7.53% year-over-year.
• Net Profit Margin has increased to 19.22% from the previous 17.92%.
• Future P/E ratio has fallen slightly to 7.33x from 7.69x.