Century Aluminum (CENX) Stock Gains After Curtailment Announcement

Century Aluminum (CENX) shares are higher following the company's third curtailment announcement in two months.
By Lindsay Ingram ,

NEW YORK (TheStreet) -- Shares of Century Aluminum (CENX) - Get Report were gaining 3.5% to $3.75 on Monday following the aluminum producer's Friday announcement that it will curtail one of three potlines at its Sebree, KY smelters by the end of the year.

The curtailment will reduce the 210,000 tonne per year plant's capacity by about 70,000 tonnes, according to Reuters. The company plans to lay off about 150 of the 525 employees at Sebree after the curtailment.

The recent announcement is Century Aluminum's third smelter curtailment announcement in the past two months due to weak aluminum prices.

Earlier in October Century Aluminum said it would close its 224,000-tonne smelter in Mount Holly, SC by December 31 if it doesn't receive a favorable power deal. The company also announced it would reduce production at its Hawesville, KY smelter in August, according to Reuters.

TheStreet Ratings team rates CENTURY ALUMINUM CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate CENTURY ALUMINUM CO (CENX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CENX's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that CENX's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 211.3% when compared to the same quarter one year ago, falling from $50.41 million to -$56.11 million.
  • Net operating cash flow has significantly decreased to -$77.81 million or 187.33% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CENX
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