Shares surge despite a brutal miss. Century Aluminum (CENX) reported Q4 EPS of $0.15, falling 81.0% short of the $0.79 consensus estimate—the company’s worst earnings miss in over two years. Yet shares jumped 6.3% to $51.03 in Wednesday trading, continuing a momentum run that has seen the stock double from $27.21 in mid-November to current levels. The rally suggests investors are looking past quarterly results to focus on strategic developments driving the aluminum producer’s long-term prospects.
Revenue holds despite operational headwinds. Full-year revenue landed at $2.5B, up 17.3% year-over-year, though the company faced production challenges during the quarter. Q3 shipments totaled approximately 162,000 tons, down from the prior quarter due to what management termed “brief operational instability” at its Mt. Holly facility. CEO Jesse Gary referenced the company’s timeline for “resuming full production at Grundartangi” during the earnings call, indicating the Icelandic smelter continues working through capacity constraints.
The 45X catalyst. CFO Peter Trpkovski highlighted a critical liquidity event during Q&A: “We did receive the first tranche of those 45X payments from 2024 fiscal year of $75 million in October.” The reference to Section 45X—a tax credit for domestic production of clean energy components including aluminum—represents a significant cash infusion that management expects will help Century “reach those net debt targets in 2026.” With liquidity and net debt currently hovering near stated targets, the 45X payments could accelerate deleveraging while funding capacity expansion.
Strategic partnership momentum. The stock’s resilience despite the earnings miss likely stems from non-financial catalysts. On February 10, Emirates Global Aluminium CEO Abdulnasser Bin Kalban and Jesse Gary met with U.S. Energy Secretary Chris Wright to discuss their partnership building “the country’s first primary aluminum smelter” in decades—a project that positions Century at the center of efforts to reshore critical materials production. Analysts from B. Riley Securities, BMO, and John Tumazos Very Independent Research participated in the Q3 call, with questions focusing on the company’s progress toward debt reduction targets.
Valuation disconnect. Trading at 60.7x trailing earnings but just 8.6x forward earnings, Century’s valuation implies the market expects a dramatic profit inflection. Forward EPS estimates of $5.97 would represent a sevenfold increase from the trailing $0.84, driven by higher utilization rates at Grundartangi, 45X credit monetization, and potential margin expansion as aluminum prices remain supported by global supply constraints. The stock now trades 19.8% above its 50-day average and 81.1% above its 200-day average, reflecting the market’s bet on execution rather than current profitability.
This article was generated using AlphaStreet’s proprietary financial analysis technology and reviewed by our editorial team.