Arconic – no margin of safety

Arconic Corporation (NYSE:ARNC) is US aluminum company. It started as a public-listed company in 2020. While revenue had grown by about 2/3 since then, it had incurred losses for the past 3 years. But these losses were due to annual one-off charges. Without these, it would be profitable.

There are also concerns about its growth, financial strength and the strategic value of 2 of its business segments.

ARNC is a cyclical company. The chart below shows the link between its revenue and aluminum prices.

Despite its short history, its performance and valuation should be based on a cyclical lens. On such a basis and even assuming no further one-off charges, there is no margin of safety.

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