NYSE:ARNC

Stock Analysis Report

Executive Summary

Arconic Inc. engineers, manufactures, and sells lightweight metals worldwide.

Rewards

Trading at 42.2% below its fair value

Earnings are forecast to grow 18.81% per year

Became profitable this year

Risk Analysis

Debt is not well covered by operating cash flow

Large one-off items impacting financial results

Significant insider selling over the past 3 months



Snowflake Analysis

Moderate growth potential and slightly overvalued.


Similar Companies

Share Price & News

How has Arconic's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ARNC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

4.0%

ARNC

2.2%

US Aerospace & Defense

1.7%

US Market


1 Year Return

47.5%

ARNC

36.3%

US Aerospace & Defense

23.2%

US Market

Return vs Industry: ARNC exceeded the US Aerospace & Defense industry which returned 37.9% over the past year.

Return vs Market: ARNC exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

ARNCIndustryMarket
7 Day4.0%2.2%1.7%
30 Day-2.5%7.6%4.2%
90 Day11.1%11.5%11.9%
1 Year48.3%47.5%38.8%36.3%25.8%23.2%
3 Year44.7%40.9%60.0%51.4%52.8%42.9%
5 Yearn/a98.6%79.6%75.2%55.8%

Price Volatility Vs. Market

How volatile is Arconic's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Arconic undervalued compared to its fair value and its price relative to the market?

41.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ARNC ($29.58) is trading below our estimate of fair value ($51.17)

Significantly Below Fair Value: ARNC is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ARNC is poor value based on its PE Ratio (36x) compared to the Aerospace & Defense industry average (20.7x).

PE vs Market: ARNC is poor value based on its PE Ratio (36x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: ARNC is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: ARNC is overvalued based on its PB Ratio (2.8x) compared to the US Aerospace & Defense industry average (2.7x).


Next Steps

Future Growth

How is Arconic forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

18.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARNC's forecast earnings growth (18.8% per year) is above the savings rate (1.7%).

Earnings vs Market: ARNC's earnings (18.8% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: ARNC's earnings are forecast to grow, but not significantly.

Revenue vs Market: ARNC's revenue (2.3% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: ARNC's revenue (2.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ARNC's Return on Equity is forecast to be high in 3 years time (23%)


Next Steps

Past Performance

How has Arconic performed over the past 5 years?

44.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARNC has a large one-off loss of $672.0M impacting its September 30 2019 financial results.

Growing Profit Margin: ARNC became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: ARNC has become profitable over the past 5 years, growing earnings by 44.7% per year.

Accelerating Growth: ARNC has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: ARNC has become profitable in the last year, making it difficult to compare its past year earnings growth to the Aerospace & Defense industry (13.9%).


Return on Equity

High ROE: ARNC's Return on Equity (8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Arconic's financial position?


Financial Position Analysis

Short Term Liabilities: ARNC's short term assets ($5.9B) exceed its short term liabilities ($4.5B).

Long Term Liabilities: ARNC's short term assets ($5.9B) do not cover its long term liabilities ($8.3B).


Debt to Equity History and Analysis

Debt Level: ARNC's debt to equity ratio (134.6%) is considered high.

Reducing Debt: Insufficient data to determine if ARNC's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: ARNC's debt is not well covered by operating cash flow (5.1%).

Interest Coverage: ARNC's interest payments on its debt are well covered by EBIT (4.7x coverage).


Balance Sheet

Inventory Level: ARNC has a high level of physical assets or inventory.

Debt Coverage by Assets: ARNC's debt is not covered by short term assets (assets are 0.9x debt).


Next Steps

Dividend

What is Arconic's current dividend yield, its reliability and sustainability?

0.27%

Current Dividend Yield


Dividend Yield vs Market

company0.3%marketbottom25%1.4%markettop25%3.6%industryaverage1.7%forecastin3Years0.3%

Current dividend yield vs market & industry

Notable Dividend: ARNC's dividend (0.27%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: ARNC's dividend (0.27%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: ARNC is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: ARNC is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: ARNC is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of ARNC's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Arconic's salary, the management and board of directors tenure and is there insider trading?

3.2yrs

Average management tenure


CEO

John Plant (65yo)

0.9yrs

Tenure

US$402,459

Compensation

Mr. John C. Plant, FCA, has been Executive Vice President at Northrop Grumman Space & Mission Systems Corporation since 2001 and has been its Member of Chief Executive Officer office since February 2002. M ...


Management Age and Tenure

3.2yrs

Average Tenure

53yo

Average Age

Experienced Management: ARNC's management team is considered experienced (3.2 years average tenure).


Board Age and Tenure

3.5yrs

Average Tenure

66.5yo

Average Age

Experienced Board: ARNC's board of directors are considered experienced (3.5 years average tenure).


Insider Trading

Insider Buying: ARNC insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

SellUS$434,44427 Nov 19
Timothy Myers
EntityIndividual
Role
Senior Key Executive
Executive VP & President of GRP
Shares14,098
Max PriceUS$30.82
SellUS$312,49421 Nov 19
W. Myron
EntityIndividual
Shares10,188
Max PriceUS$30.67
BuyUS$147,52313 Nov 19
James Albaugh
EntityIndividual
Role
Member of the Board of Directors
Director
Shares5,000
Max PriceUS$29.50
SellUS$152,829,04528 Aug 19
Elliott Management Corporation
EntityCompany
Shares6,099,302
Max PriceUS$25.17
SellUS$60,392,51728 Aug 19
Elliott Management Corporation
EntityCompany
Shares2,463,995
Max PriceUS$24.51
SellUS$253,27222 Aug 19
Timothy Myers
EntityIndividual
Role
Senior Key Executive
Executive VP & President of GRP
Shares10,000
Max PriceUS$25.33
BuyUS$735,05608 Aug 19
John Plant
EntityIndividual
Role
Chief Executive Officer
Chairman & CEO
Shares30,463
Max PriceUS$24.18
BuyUS$499,44706 May 19
Rajiv Gupta
EntityIndividual
Role
Member of the Board of Directors
Director
Shares22,603
Max PriceUS$22.10
BuyUS$1,106,93006 May 19
John Plant
EntityIndividual
Role
Chief Executive Officer
Chairman & CEO
Shares50,000
Max PriceUS$22.14

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • John Plant (65yo)

    Chairman & CEO

    • Tenure: 0.9yrs
    • Compensation: US$402.46k
  • Neil Marchuk (61yo)

    Executive Vice President of Human Resources

    • Tenure: 0.8yrs
  • Tim Myers (53yo)

    Executive VP & President of GRP

    • Compensation: US$2.55m
  • PT Luther

    Director of Investor Relations

    • Kate Ramundo (51yo)

      Executive VP

      • Tenure: 3.2yrs
      • Compensation: US$2.23m
    • Max Laun

      VP, General Counsel and Chief Ethics & Compliance Officer

      • George King

        Head of Corporate Development

        • Ken Giacobbe (53yo)

          Executive VP & CFO

          • Tenure: 3.2yrs
          • Compensation: US$3.16m
        • L. Watts-Stanfield

          Chief Financial Officer of Transportation & Construction Solutions and Member of Executive Council

          • Tenure: 4.4yrs
        • Glenn Miller

          Chief Financial Officer for Global Rolled Products (GRP) Business and Member of Executive Council


          Board Members

          • Stan O'Neal (68yo)

            Independent Director

            • Tenure: 12yrs
            • Compensation: US$251.01k
          • John Plant (65yo)

            Chairman & CEO

            • Tenure: 0.9yrs
            • Compensation: US$402.46k
          • Raj Gupta (74yo)

            Director

            • Tenure: 3.2yrs
            • Compensation: US$240.01k
          • Jim Albaugh (69yo)

            Director

            • Tenure: 2.7yrs
            • Compensation: US$198.26k
          • Rick Schmidt (69yo)

            Independent Director

            • Tenure: 3.9yrs
            • Compensation: US$267.51k
          • Sean Mahoney (56yo)

            Director

            • Tenure: 3.9yrs
            • Compensation: US$266.14k
          • Chris Ayers (52yo)

            Director

            • Tenure: 2.7yrs
            • Compensation: US$192.27k
          • Amy Alving (57yo)

            Independent Director

            • Tenure: 2yrs
            • Compensation: US$52.47k
          • Michelle Kiely

            Member of Community Advisory Board

            • Tenure: 6.7yrs
          • Frank Sewell

            Member of Community Advisory Board

            • Tenure: 6.7yrs

          Company Information

          Arconic Inc.'s company bio, employee growth, exchange listings and data sources


          Key Information

          • Name: Arconic Inc.
          • Ticker: ARNC
          • Exchange: NYSE
          • Founded: 1888
          • Industry: Aerospace and Defense
          • Sector: Capital Goods
          • Market Cap: US$12.988b
          • Shares outstanding: 432.94m
          • Website: https://www.arconic.com

          Number of Employees


          Location

          • Arconic Inc.
          • 390 Park Avenue
          • New York
          • New York
          • 10022
          • United States

          Listings

          TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
          0TCULSE (London Stock Exchange)YesCommon StockGBUSDOct 2016
          ARNCNYSE (New York Stock Exchange)YesCommon StockUSUSDOct 2016
          ALU2DB (Deutsche Boerse AG)YesCommon StockDEEUROct 2016
          ARNC *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNOct 2016
          ARNCSNSE (Santiago Stock Exchange)YesCommon StockCLUSDOct 2016
          ARNCSWX (SIX Swiss Exchange)YesCommon StockCHCHFOct 2016
          ALU2XTRA (XETRA Trading Platform)YesCommon StockDEEUROct 2016
          ARNC-UETLX (Eurotlx)YesCommon StockITEUROct 2016
          ARNCWBAG (Wiener Boerse AG)YesCommon StockATEUROct 2016
          ARNC.PRAMEX (NYSE MKT LLC)PFD SER AUSUSDNov 2016
          ARNCBASE (Buenos Aires Stock Exchange)CEDEAR EACH 6 REP 1 COM USD1ARARSNov 2016
          ARNC34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 SHSBRBRLMay 2017

          Biography

          Arconic Inc. engineers, manufactures, and sells lightweight metals worldwide. The company operate in three segments: Engineered Products and Solutions, Global Rolled Products, and Transportation and Construction Solutions. The Engineered Products and Solutions segment produces and sells fastening systems and seamless rolled rings; investment castings, including airfoils and forged jet engine components; and extruded, machined, and formed aircraft parts for aerospace (commercial and defense), industrial, commercial transportation, and power generation end markets. It also offers various forged, extruded, and machined metal products for the oil and gas, automotive, and land and sea defense end markets. The Global Rolled Products segment produces and sells aluminum sheets and plates for the aerospace, automotive, commercial transportation, packaging, building and construction, and industrial products end markets; and aseptic foils for the packaging end market. The Transportation and Construction Solutions segment provides integrated aluminum structural systems, architectural extrusions, and forged aluminum commercial vehicle wheels, which are used primarily in the commercial transportation and nonresidential building and construction end markets. It also produces aluminum products for the industrial products end market. Arconic Inc. sells its products directly to customers, as well as through distributors. The company was founded in 1888 and is based in New York, New York. 


          Company Analysis and Financial Data Status

          All financial data provided by Standard & Poor's Capital IQ.
          DataLast Updated (UTC time)
          Company Analysis2020/01/17 02:29
          End of Day Share Price2020/01/16 00:00
          Earnings2019/09/30
          Annual Earnings2018/12/31


          Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.