Kaiser Aluminum (KALU): Assessing Valuation After Strong Earnings and Raised 2025 Revenue Guidance

Kaiser Aluminum (KALU) just posted much stronger third quarter and nine-month numbers, with year-over-year jumps in sales and net income. The company also lifted its 2025 full-year conversion revenue outlook, which has fueled investor conversation.

See our latest analysis for Kaiser Aluminum.

Kaiser Aluminum’s upbeat earnings report and its move to raise full-year revenue guidance seem to be rekindling investor enthusiasm, especially after the company finalized a major $500 million debt offering. The stock has delivered a 15.6% one-month share price return, with momentum building as its one-year total shareholder return now stands at 24.6%, which is well ahead of where it started the year.

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With shares surging and management lifting guidance for 2025, investors are left to wonder: does Kaiser Aluminum remain undervalued given its recent momentum, or is the market already pricing in the next leg of growth?

Price-to-Earnings of 17.1x: Is it justified?

At a price-to-earnings (P/E) ratio of 17.1x, Kaiser Aluminum stands out as less expensive than most of its U.S. Metals and Mining peers, trading near $90.53 after recent gains.

The price-to-earnings ratio captures how much investors are willing to pay for a dollar of earnings. For a cyclical, capital-intensive business like Kaiser Aluminum, this multiple can reflect both its growth trajectory and how the market values earnings consistency and risk in the sector.

With the U.S. industry average at 24.3x, Kaiser Aluminum’s 17.1x P/E seems conservative. This signals the stock could still have headroom as the market digests its strong earnings momentum and the company’s forecast for robust profit growth. Comparing to the fair price-to-earnings level of 21.7x, there is even more potential for the market to re-rate the shares higher in line with sector and fair value averages.

Explore the SWS fair ratio for Kaiser Aluminum

Result: Price-to-Earnings of 17.1x (UNDERVALUED)

However, persistent macroeconomic uncertainties and fluctuating commodity prices could challenge Kaiser Aluminum’s earnings outlook and put the sustainability of its recent momentum to the test.

Find out about the key risks to this Kaiser Aluminum narrative.

Another View: SWS DCF Model Weighs In

While the price-to-earnings ratio suggests Kaiser Aluminum is undervalued compared to peers and its fair ratio, our DCF model provides a more in-depth analysis by estimating the business's future cash flows. On this basis, shares appear even more discounted, trading nearly 34% below our calculated fair value of $136.52. This gap might signal potential for further upside, or it could indicate that the market is cautious for a specific reason.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Kaiser Aluminum for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 832 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Kaiser Aluminum Narrative

If you'd rather form your own view or prefer to dive into the numbers yourself, it’s easy to craft a personalized narrative in just a few minutes. Do it your way

A great starting point for your Kaiser Aluminum research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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