To The Moon

In the past five days, $Century Aluminum(CENX)$ 's share price has risen by 14.73%.

US stocks rose on Friday after snapping a recent losing streak, as signs of cooling inflation and waning AI worries buoyed Wall Street optimism toward the tail end of a topsy-turvy week. The $S&P 500(.SPX)$ put on 0.8% and the $NASDAQ(.IXIC)$ gained over 1.3%, building on Thursday's roaring rally. The $Dow Jones(.DJI)$ climbed 0.3%.

The best-performing concepts is Aluminum Concept. Considering the different perceptions of the stock, this time TigerPicks chose $Century Aluminum(CENX)$ to have a fundamental highlight to help users understand it better.

In the past five days, $Century Aluminum(CENX)$ 's share price has risen by 14.73%.

$Century Aluminum(CENX)$

CENX is considered by the global base metals investment community to be a renowned global producer of aluminum, which, according to Clinton Aluminum, is now one of the most popular materials and is used in countless applications in the world's largest and most developed countries.

New Growth Drivers

The company’s growth outlook is supported by four key factors:

1. Lower financing costs
   Following multiple Fed rate cuts, Century Aluminum refinanced $400 million of secured notes—over 80% of its total debt—extending maturities from 2026 to 2032 and reducing the interest rate from 7.50% to 6.875%. This strengthened credit confidence and improved access to capital to support output growth.

2. New capital to restart capacity
   An additional $50 million investment is earmarked to increase annual output by 50,000 metric tons, lifting production from about 690,000 tons to roughly 740,000 tons. This will be achieved by ramping up underutilized capacity at the Mount Holly smelter in South Carolina, which is expected to reach full utilization by early summer 2026—its first time at full capacity since 2015.

3. Supportive U.S. trade policy under a second Trump administration
   Higher Section 232 tariffs are expected to favor domestic aluminum producers, reinforcing the recovery of U.S. primary aluminum production and broader manufacturing.

4. Sustained upward pressure on aluminum prices
   Global supply constraints are supporting elevated aluminum prices. China has sharply reduced its base metals output growth targets and is enforcing capacity caps, while Alcoa plans to shut its Kwinana alumina refinery in Australia. At the same time, long-term demand is expected to strengthen, supported by large-scale investments in data centers, which are aluminum-intensive.

Profitability and Shipments

In its Q2 2025 earnings commentary, Century Aluminum CEO Jesse Gary emphasized that U.S. government efforts to protect domestic products—particularly aluminum—are expected to benefit the company. Improved credit market confidence, reflected in successful debt refinancing and maturity extensions, is supporting Century Aluminum’s capacity expansion and its role in strengthening U.S. strategic aluminum supply.

Key highlights include:

• Policy impact: The restart of the final 50,000 tons of capacity at the Mount Holly smelter is directly linked to Section 232 trade protections, which management says will boost U.S. primary aluminum output by nearly 10%.

• Shipments: Q2 shipments totaled 175,741 metric tons, up 4% quarter over quarter, positioning the company to benefit from rising aluminum prices.

• Revenue: Net sales declined 1% QoQ to $628.1 million, mainly due to lower third-party alumina sales, partially offset by stronger regional premiums, volumes, and product mix.

• Profitability:

  • Adjusted net income attributable to shareholders was $30.4 million, down 17% QoQ, as higher metal prices and premiums did not fully offset derivative losses.

  • Adjusted EBITDA was $74.3 million, down 4.7% QoQ, pressured by higher raw material costs, increased operating expenses, and adverse currency effects.

Overall, while near-term earnings softened sequentially, supportive U.S. trade policy, rising shipments, and expectations of higher aluminum prices provide a constructive backdrop for margin recovery.

Position and Financial Strength

As of June 30, 2025, Century Aluminum reported total liquidity of $362.5 million, consisting of $40.7 million in cash and equivalents and $321.8 million in available borrowing capacity.

Financial strength

• Total debt: $488.8 million in Q2 2025

• Trailing 12-month interest expense: $47.1 million, expected to decline following the refinancing of $400 million of secured notes at a lower interest rate and longer maturity

• Trailing 12-month operating income: $179.9 million, with further improvement expected

• Interest coverage ratio: 3.82x, well above the minimum acceptable range (1.5–2.0x), indicating strong ability to service debt

• Net debt / adjusted EBITDA: 1.32x (net debt of $448.1 million vs. TTM adjusted EBITDA of $338.4 million), a healthy level for a capital-intensive, cyclical aluminum producer

The company has entered a cash-generating phase, leading to declining net debt. Trailing 12-month adjusted EBITDA has been trending higher, supported by improving aluminum prices.

Management guides for Q3 2025 adjusted EBITDA of $115–125 million (midpoint $120 million), implying +61.5% QoQ and +15.7% YoY growth. This suggests further improvement in leverage metrics, particularly net debt to EBITDA.

Conclusion

The company is benefiting from lower borrowing costs, having strengthened its balance sheet through debt refinancing and maturity extensions. This provides flexibility to expand aluminum capacity in South Carolina, supported by U.S. government policies under President Trump aimed at protecting and rebuilding domestic aluminum production.

Global aluminum supply remains tight relative to demand, supporting higher prices. While tariffs, geopolitical tensions, and inflation may keep operating costs elevated, these pressures are likely to be offset by higher volumes, an improved product mix, and stronger realized prices.

Overall, earnings are more likely to improve than deteriorate, and the stock appears fairly valued at current levels.

Stock Price Forecast:

Here are the target price forecasts for the next 12 months from analysts.

Based on 3 Wall Street analysts offering 12 month price targets for Century Aluminum in the last 3 months. The average price target is $36.67 with a high forecast of $42.00 and a low forecast of $34.00. The average price target represents a 1.27% change from the last price of $36.21.

Resource:

https://seekingalpha.com/article/4831361-century-aluminum-sees-rising-profits-with-expanded-smelting-capacity-and-higher-prices-rating-upgrade

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