Shares of Century Aluminum (CENX -2.27%) plunged nearly 14% by 2:30 p.m. ET on Friday. Weighing on the aluminum company's stock price were its first-quarter results and an analyst downgrade.
Century Aluminum reported its first-quarter results after the closing bell on Thursday. On the one hand, they were pretty good. Net sales jumped 14% sequentially to $753.6 million, driven by 5% higher shipments and higher aluminum prices. That was ahead of analysts' consensus estimate for $731.3 million in revenue. Meanwhile, adjusted earnings came in at $0.59 per share, which was also ahead of the consensus estimate of $0.34 per share.
CEO Jesse Gary said he was "pleased to report these excellent results for the first quarter." He also said: "Demand remains strong in our core markets in the U.S. and Europe and inventories have been drawn down to post-financial crisis lows. While we continue to see inflationary pressure in energy markets and other key raw materials, our focus on cost discipline and execution leaves us well situated to benefit from historically high aluminum prices."
However, while the CEO was looking at the positives, analysts focused on the negatives. BMO cut its price target on the stock from $32 to $24 following the report, citing the higher ongoing costs. BMO also didn't like the company's lackluster outlook on aluminum prices nor its second-quarter target for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $120 million to $130 million. That range was significantly below its estimate due to higher costs.
Shares of Century Aluminum have taken investors on quite a ride this year. They surged more than 75% over the first three months but have now given up all those gains. The problem is that the company isn't fully capturing the rise in aluminum prices due to inflating costs. If it can get its costs under control, the stock could bounce back. If not, it could continue to fall as inflation eats away at Century's earnings capability.