Financial Review: Arconic (ARNC) versus Its Competitors

Arconic (NYSE: ARNC) is one of 42 publicly-traded companies in the “Aerospace & Defense” industry, but how does it contrast to its peers? We will compare Arconic to similar businesses based on the strength of its dividends, earnings, valuation, profitability, analyst recommendations, risk and institutional ownership.

Institutional & Insider Ownership

74.7% of Arconic shares are owned by institutional investors. Comparatively, 73.3% of shares of all “Aerospace & Defense” companies are owned by institutional investors. 0.1% of Arconic shares are owned by company insiders. Comparatively, 6.7% of shares of all “Aerospace & Defense” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Arconic and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arconic 0 2 4 0 2.67
Arconic Competitors 486 2188 2410 89 2.41

Arconic presently has a consensus target price of $29.17, indicating a potential upside of 15.83%. As a group, “Aerospace & Defense” companies have a potential upside of 13.51%. Given Arconic’s stronger consensus rating and higher probable upside, analysts plainly believe Arconic is more favorable than its peers.

Dividends

Arconic pays an annual dividend of $0.24 per share and has a dividend yield of 1.0%. Arconic pays out -15.1% of its earnings in the form of a dividend. As a group, “Aerospace & Defense” companies pay a dividend yield of 1.4% and pay out 35.9% of their earnings in the form of a dividend.

Volatility and Risk

Arconic has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, Arconic’s peers have a beta of 1.06, suggesting that their average stock price is 6% more volatile than the S&P 500.

Valuation and Earnings

This table compares Arconic and its peers gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Arconic $12.39 billion -$941.00 million -15.84
Arconic Competitors $8.89 billion $721.62 million 203.69

Arconic has higher revenue, but lower earnings than its peers. Arconic is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Arconic and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arconic -4.70% 9.71% 2.73%
Arconic Competitors -6.88% 22.51% 3.40%

Summary

Arconic peers beat Arconic on 8 of the 15 factors compared.

Arconic Company Profile

Arconic Inc., formerly Alcoa Inc., is engaged in lightweight metals engineering and manufacturing. The Company operates through three segments: Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions. Its multi-material products, which include aluminum, titanium and nickel, are used around the world in markets, such as aerospace, automotive, commercial transportation and packaging. The Global Rolled Products segment produces a range of aluminum sheet and plate products for the aerospace, automotive, commercial transportation, brazing and industrial markets. The Engineered Products and Solutions segment develops and manufactures products for the aerospace (commercial and defense), commercial transportation and power generation end markets. The Transportation and Construction Solutions segment produces products that are used in the non-residential building and construction and commercial transportation end markets.

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