ATI has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 17.6% to $192.62 per share while the index has gained 12.8%.
Is now the time to buy ATI? Find out in our full research report, it’s free.
Why Are We Positive on ATI?
With its materials flying in nearly every commercial and military aircraft in service today, ATI (NYSE:ATI) produces highly specialized materials and components for aerospace, defense, medical, and energy applications using advanced metallurgy and manufacturing processes.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, ATI’s sales grew at an excellent 12.9% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
ATI’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, ATI’s margin expanded by 18.8 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. ATI’s free cash flow margin for the trailing 12 months was 11.2%.
Final Judgment
These are just a few reasons why we think ATI is an elite industrials company. At $192.62 per share (or 32.4× forward P/E), is now the time to initiate a position? See for yourself in our full research report, it’s free.
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