Investment Thesis
Century Aluminum demonstrates strong cyclical profitability with exceptional margins (52% net, 57.6% operating) and conservative leverage, reflecting favorable commodity pricing. However, negative free cash flow (-$6.4M) despite $337.5M net income, combined with severe EPS decline (-87.2%) despite net income surge (+153.2%), raises critical concerns about earnings quality and sustainability.
Strengths
- Exceptional profitability margins (52% net margin) indicating strong pricing power in current commodity cycle
- Conservative balance sheet leverage (0.37x D/E) with strong debt service capacity (19.2x interest coverage)
- Solid liquidity position ($244.1M cash, 2.30x current ratio) to weather commodity downturns
- Double-digit revenue growth (13.9% YoY) demonstrating demand strength in aluminum markets
Risks
- Negative free cash flow despite high net income suggests potential one-time gains or accounting adjustments, raising earnings quality concerns
- Severe EPS collapse (-87.2% YoY) versus net income surge (+153.2%) indicates significant share dilution or non-recurring income items
- Cyclical commodity exposure with low gross margins (18.3%) vulnerable to price volatility and economic downturn
- Capital-intensive operations ($74.8M CapEx) with CapEx exceeding operating cash flow, limiting financial flexibility
Key Metrics to Watch
- Free cash flow sustainability and CapEx requirements relative to operating cash generation
- Reconciliation of net income growth versus EPS decline to assess quality of earnings
- Aluminum commodity pricing trends and margin trajectory as potential cycle indicators
- Share count and dilution metrics to explain EPS deterioration
Financial Metrics
Revenue
649.2M
Net Income
337.5M
EPS (Diluted)
$3.23
Free Cash Flow
-6.4M
Total Assets
2.7B
Cash
244.1M
Profitability Ratios
Gross Margin
18.3%
Operating Margin
57.6%
Net Margin
52.0%
ROE
29.3%
ROA
12.7%
FCF Margin
-1.0%
Balance Sheet & Liquidity
Current Ratio
2.30x
Quick Ratio
1.36x
Debt/Equity
0.37x
Debt/Assets
46.0%
Interest Coverage
19.18x
Long-term Debt
430.9M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T09:34:54.817076 |
Data as of: 2026-03-31 |
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