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Category: Ampco-Pittsburgh (AP)
Date: 16 November 2020 Stock price of Ampco-Pittsburgh: $4.12 We take a look at the 3rd quarter 2020 earnings report of Ampco-Pittsburgh, a manufacturer and seller of highly engineered speciality metal products. Revenue for the quarter came in at $75.6 million and net income came in at $968 000.
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Brett McBrayer, Ampco-Pittsburgh’s Chief Executive Officer - Ampco-Pittsburgh has continued to perform amidst the challenges presented by this pandemic. Despite significant plant downtime experienced in the quarter to manage through the contraction and handle scheduled maintenance activities, we extended our positive net earnings performance for a fourth consecutive quarter "
More About Ampco-Pittsburgh
Ampco-Pittsburgh Corporation manufactures and sells highly engineered, high-performance specialty metal products and customized equipment utilized by industry throughout the world. Through its operating subsidiary, Union Electric Steel Corporation, it is a leading producer of forged and cast rolls for the global steel and aluminum industry. It also manufactures open-die forged products that principally are sold to customers in the steel distribution market, oil and gas industry, and the aluminum and plastic extrusion industries. The Corporation is also a producer of air and liquid processing equipment, primarily custom-engineered finned tube heat exchange coils, large custom air handling systems, and centrifugal pumps. It operates manufacturing facilities in the United States, England, Sweden, Slovenia, and participates in three operating joint ventures located in China. It has sales offices in North and South America, Asia, Europe, and the Middle East. Corporate headquarters is located in Carnegie, Pennsylvania.
Overview of Ampco-Pitssburgh 3rd quarter 2020 earnings report
- Ampco Corporation reports EPS of $0.07 per diluted share for Q3 2020 despite continued impact of COVID-19 pandemic on end-market demand, sequentially higher than Q2 2020 EPS.
- Return to profitability extends for fourth consecutive quarter. • $19.3 million gross proceeds from equity offering completed in Q3.
- Total debt of $32.6 million reduced by $38.3 million (54%) from $70.9 million at December 31, 2019.
Ampco-Pittsburgh Corporation (NYSE: AP) (the "Corporation" or “Ampco-Pittsburgh”) reported net income for the three and nine months ended September 30, 2020, of $1.0 million, or $0.07 per diluted share, and $5.8 million, or $0.43 per diluted share, respectively. By comparison, the Corporation incurred a net loss of $(5.1) million, or $(0.40) per diluted share, and $(24.1) million, or $(1.91) per diluted share, for the same periods of the prior year which respectively included losses of $(0.27) and $(0.72) per diluted share from discontinued operations. Sales from continuing operations were $75.7 million and $241.5 million for the three and nine months ended September 30, 2020, respectively, compared to $90.9 million and $300.9 million for the three and nine months ended September 30, 2019, respectively. The decrease is primarily attributable to a lower volume of shipments for the Forged and Cast Engineered Products segment due to pandemic-related customer deferrals in the flat-rolled steel and aluminum markets and, to a lesser extent, reduced demand for other forged engineered products, primarily in the oil and gas market.
Ampco-Pitssburgh management commentary 3rd quarter 2020 earnings report
Carnegie, PA, November 16, 2020 – Ampco-Pittsburgh Corporation (NYSE: AP) (the "Corporation" or “Ampco-Pittsburgh”) reported net income for the three and nine months ended September 30, 2020
Remarking on the quarter’s results, Brett McBrayer, Ampco-Pittsburgh’s Chief Executive Officer, said, “Ampco-Pittsburgh has continued to perform amidst the challenges presented by this pandemic. Despite significant plant downtime experienced in the quarter to manage through the contraction and handle scheduled maintenance activities, we extended our positive net earnings performance for a fourth consecutive quarter. The Forged and Cast Engineered Products segment delivered improved results for the quarter compared to prior year, while the Air and Liquid Processing segment remained a stable force with results equaling prior year. Our successful equity raise during Q3 strengthened our balance sheet considerably and with significant liquidity and operating leverage, we are well positioned to capitalize on recovery in our end markets.”
Remarking on the quarter’s results, Brett McBrayer, Ampco-Pittsburgh’s Chief Executive Officer, said, “Ampco-Pittsburgh has continued to perform amidst the challenges presented by this pandemic. Despite significant plant downtime experienced in the quarter to manage through the contraction and handle scheduled maintenance activities, we extended our positive net earnings performance for a fourth consecutive quarter. The Forged and Cast Engineered Products segment delivered improved results for the quarter compared to prior year, while the Air and Liquid Processing segment remained a stable force with results equaling prior year. Our successful equity raise during Q3 strengthened our balance sheet considerably and with significant liquidity and operating leverage, we are well positioned to capitalize on recovery in our end markets.”
Segment Results
Forged and Cast Engineered Products
Sales for the three and nine months ended September 30, 2020, declined 19% and 25% from the respective prior year periods primarily due to customers deferring shipments for mill rolls in response to pandemicrelated market impacts and, to a lesser extent, lower demand for other forged engineered products, primarily in the oil and gas market. Operating results for the three months ended September 30, 2020, improved compared to prior year. While the segment was adversely impacted by the lower volume of shipments and net unabsorbed costs associated with the temporary idling of certain of its forged and cast roll manufacturing facilities in response to lower demand, elimination of the Excess Costs of Avonmore, and a reduced cost structure due to restructuring and efficiency improvements more than offset the impact to operating results.
Air and Liquid Processing
Sales for the Air and Liquid Processing segment for the three and nine months ended September 30, 2020, were slightly below prior year levels. Operating income for the quarter was approximately equal to the prior year level yet continues to exceed prior year on a year-to-date basis.
Forged and Cast Engineered Products
Sales for the three and nine months ended September 30, 2020, declined 19% and 25% from the respective prior year periods primarily due to customers deferring shipments for mill rolls in response to pandemicrelated market impacts and, to a lesser extent, lower demand for other forged engineered products, primarily in the oil and gas market. Operating results for the three months ended September 30, 2020, improved compared to prior year. While the segment was adversely impacted by the lower volume of shipments and net unabsorbed costs associated with the temporary idling of certain of its forged and cast roll manufacturing facilities in response to lower demand, elimination of the Excess Costs of Avonmore, and a reduced cost structure due to restructuring and efficiency improvements more than offset the impact to operating results.
Air and Liquid Processing
Sales for the Air and Liquid Processing segment for the three and nine months ended September 30, 2020, were slightly below prior year levels. Operating income for the quarter was approximately equal to the prior year level yet continues to exceed prior year on a year-to-date basis.
Ampco-Pittsburgh (AP) stock price history over the last 5 years
The image below, obtained from Google shows the stock price history of The Ampco-Pittsburgh (BV) for the last 5 years and it's been a pretty good time for Ampco-Pittsburgh stockholders over the last 5 years. 5 years ago the stock was trading at $130 and its currently trading at $272. That's a very strong return of 109% provided to Ampco-Pittsburgh stockholders over the last 5 years.
The stock of Ampco-Pittsburgh is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of The Ampco-Pittsburgh stock is very positive at this point in time.
The stock of Ampco-Pittsburgh is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of The Ampco-Pittsburgh stock is very positive at this point in time.
Latest stock valuation of Ampco-Pittsburgh
So what is Ampco-Pittsburgh stock worth based on their 3rd quarter 2020 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Ampco-Pittsburgh at $7.20 a stock.
We therefore believe the stock of Ampco-Pittsburgh is undervalued at its current price of $4.12
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $7.20, thus a good entry point into Ampco-Pittsburgh would be at $6.50 or below.
We expect the stock of Ampco-Pittsburgh to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued. Since the stock of Ampco-Pittsburgh is trading at well below our suggested entry price we rate their stock as a buy
We therefore believe the stock of Ampco-Pittsburgh is undervalued at its current price of $4.12
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $7.20, thus a good entry point into Ampco-Pittsburgh would be at $6.50 or below.
We expect the stock of Ampco-Pittsburgh to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued. Since the stock of Ampco-Pittsburgh is trading at well below our suggested entry price we rate their stock as a buy
Next earnings release of Ampco-Pittsburgh
It is expected that Ampco-Pittsburgh will release their 4th quarter 2020 earnings report in mid February 2021
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