Analysts Are Optimistic We'll See A Profit From Century Aluminum Company (NASDAQ:CENX)

Century Aluminum Company +0.42%

Century Aluminum Company

CENX

18.96

+0.42%

With the business potentially at an important milestone, we thought we'd take a closer look at Century Aluminum Company's (NASDAQ:CENX) future prospects. Century Aluminum Company, together with its subsidiaries, produces standard-grade and value-added primary aluminum products in the United States and Iceland. The company’s loss has recently broadened since it announced a US$14m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$175m, moving it further away from breakeven. The most pressing concern for investors is Century Aluminum's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Century Aluminum

According to the 3 industry analysts covering Century Aluminum, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$58m in 2024. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 113%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGS:CENX Earnings Per Share Growth January 30th 2024

We're not going to go through company-specific developments for Century Aluminum given that this is a high-level summary, however, bear in mind that by and large a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Century Aluminum is its debt-to-equity ratio of 132%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Century Aluminum to cover in one brief article, but the key fundamentals for the company can all be found in one place – Century Aluminum's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:

  1. Valuation: What is Century Aluminum worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Century Aluminum is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Century Aluminum’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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