Investing to Wealth

Century Aluminum Co. (NASDAQ: CENX)

Century Aluminum Co. (CENX) is a holding company engaged in producing aluminum. The Company’s principal subsidiaries are Century Aluminum of West Virginia Inc., Berkeley Aluminum Inc., Century Kentucky Inc. and Nordural ehf. Century of West Virginia operates a primary aluminum reduction facility in Ravenswood, West Virginia. Berkeley holds a 49.7% interest in a partnership, which operates a primary aluminum reduction facility in Mt. Holly, South Carolina, and a 49.7% undivided interest in the property, plant and equipment comprising Mt. Holly. The remaining interest in the partnership and the remaining undivided interest in Mt. Holly are owned by Alumax of South Carolina Inc., a subsidiary of Alcoa (ASC). It also holds 50% joint-venture interests in the Gramercy alumina refinery, located in Gramercy, Louisiana, and a related bauxite mining operation in Jamaica.

The Company was founded in 1981 and is based in Monterey, California.

Source: Reuters.com, SEC Filings.

Financial Summary

In the third quarter of 2008, the Company reported net income (as adjusted to reflect the implementation of ASC 470-20 Debt with Conversion and Other Options) of $35.8 million ($0.58 per basic and $0.55 per diluted common share). The reported earnings per share data reflected net income of $27.5 million allocable to common shareholders. These results were negatively impacted by a net after-tax charge of $50.4 million for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting. Results were positively impacted by a $3.3 million tax benefit related to the release of tax reserves no longer required.

Sales in the third quarter of 2009 were $228.7 million, compared with $552.2 million in the third quarter of 2008. Shipments of primary aluminum for the quarter totaled 146,245 tonnes compared with 203,618 tonnes in the year-ago quarter.

For the first nine months of 2009, the Company reported a net loss of $181.6 million ($2.56 per basic and diluted common share). These results were negatively impacted by a net after-tax charge of $35.3 million for costs associated with production curtailments at U.S. smelters and a $73.2 million impairment charge associated with the divestiture of our Gramercy, Louisiana, and St. Ann, Jamaica, equity investments. Results for the nine-month period were positively impacted by a net after-tax benefit of $57.4 million primarily from realized and unrealized gains related to the termination of the existing power contract and its replacement with a new power contract at the Hawesville, KY smelter and a $7.5 million tax benefit related to the release of tax reserves no longer required. Net after-tax inventory lower of cost or market adjustments of $26.9 million favorably impacted the nine month results. Cost of sales for the nine months includes a $14.4 million non-cash charge for the portion of power costs at Hawesville paid by the previous power supplier per the terms of the Hawesville power agreements.

For the first nine months of 2008, the Company reported a net loss (as adjusted to reflect the implementation of ASC 470-20 Debt with Conversion and Other Options) of $201.6 million ($4.66 per basic and diluted common share). Results were negatively impacted by a net after-tax charge of $466.2 million for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting. Results for the nine-month period were positively impacted by net tax benefits of $15.9 million for various non-recurring items.

Sales in the first nine months of 2009 were $642.4 million compared with $1,568.6 million in the same period of 2008. Shipments of primary aluminum for the first nine months of 2009 were 457,426 tonnes compared with 601,511 tonnes for the comparable 2008 period.

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast among 7 polled investment analysts. Against the Century Aluminum Co. company.

The 6 analysts offering 12-month price targets for CENX have a median target of 10.50, with a high estimate of 14.00 and a low estimate of 9.00. The median estimate represents a -4.11% decrease from the last price of 10.95.

Source: www.ft.com

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=CENX.O

Investment Highlights

The Company yesterday announced that, in connection with the exchange offer and consent solicitation related to its 7.5% Senior Notes due 2014, CUSIP No. 156431AH1 (the “2014 Notes”), the Company issued $245,475,800 aggregate principal amount of 8% Senior Secured Notes due 2014 (the “Exchange Notes”) in exchange for $243,052,000 aggregate principal amount of 2014 Notes and delivery of related consents; approximately $2.4 million of the Exchange Notes were issued and approximately $2.4 million in cash was paid for such consents. After giving effect to the exchange offer, $6,948,000 aggregate principal amount of 2014 Notes remain outstanding.

CENX received consents from holders of the required principal amount of the 2014 Notes to eliminate most restrictive covenants and modify certain events of default in the indenture governing the 2014 Notes.

Source: http://centuryca.com/index.html

Technical Analysis

CENX is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

CENX has been relatively stable recently. This is evidenced by the width of its Bollinger Bands, which are tighter than normal. Additionally, CENX is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

The MACD for CENX currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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