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Wall Street’s Best Digest Daily Alert: (ARNC)

This spin-off from Alcoa is expected to grow at a 35.5% rate next year.

This spin-off from Alcoa is expected to grow at a 35.5% rate next year.

Arconic Inc. (ARNC)
From Wall Street Stock Forecaster

Arconic Inc. (ARNC; TSINetwork Rating: Average) set up its bulk aluminum business as a separate company called Alcoa Corp. (see right) in November 2016.

It also handed out 80.1% of the shares in the new company to its shareholders. Each investor received one Alcoa Corp. share for every three ARNC shares they owned.

The remaining firm is a leading maker of engineered aluminum products for cars and jet engines. Based on proforma figures provided by Arconic, it earned $71 million, or $0.12 a share, in the quarter ended December 31, 2016. That’s a big jump over the $28 million, or $0.03, it earned a year earlier.

The higher earnings are mainly due to savings from a restructuring plan; revenue in the quarter fell 0.8%, to $2.97 billion from $2.99 billion.

Arconic recently sold 60% of its remaining Alcoa shares for a total of $890 million. It will probably apply the proceeds to its long-term debt of $8.0 billion. That’s a high 59% of its market cap.

The stock has now moved up in response to pressure from activist investor Elliot Management. It owns 12% of the company and wants Arconic to cut costs and boost profit margins.

The stock currently trades at 27.0 times the $1.15 a share Arconic should earn in 2017. Arconic is a buy.

Patrick McKeough, Wall Street Stock Forecaster,, 888-292-0296, March 2017