Ati Inc (NYSE: ATI)

Sector: Industrials Industry: Metal Fabrication CIK: 0001018963
Market Cap 20.40 Bn
P/B 11.95
P/E 45.86
P/S 4.45
ROIC (Qtr) 14.62
Div Yield % 0.00
Rev 1y % (Qtr) 7.07
Total Debt (Qtr) 1.91 Bn
Debt/Equity (Qtr) 1.12
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About

ATI Inc., a Delaware corporation, is a globally recognized producer of specialty materials and components, operating under the stock symbol ATI. The company is a dominant player in the aerospace, defense, energy, medical, and electronics industries. Its headquarters are stationed in Dallas, Texas, where it leads the market in producing specialty materials and components for both commercial and military jet engines and airframes. The company's business activities span across two primary segments: High Performance Materials & Components (HPMC) and...

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Investment thesis

Bull case

  • Operating cash flow of 679.40M provides exceptional 44.12x coverage of minority interest expenses 15.40M, showing strong core operations.
  • Operating cash flow of 679.40M provides strong 22.80x coverage of stock compensation 29.80M, indicating sustainable incentive practices.
  • Robust free cash flow of 472.10M exceeds capital expenditure of 207.30M by 2.28x, indicating strong organic growth funding capability.
  • Strong operating cash flow of 679.40M provides 1.93x coverage of SG&A expenses 351.40M, showing efficient operational cost management.
  • Strong tangible asset base of 4.78B provides 2.51x coverage of total debt 1.91B, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 679.40M barely covers its investment activities of (130.40M), with a coverage ratio of -5.21, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 372.20M against inventory of 1.41B, the 0.26 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Free cash flow of 472.10M represents just -23.14x of debt issuance (20.40M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 679.40M barely covers operating expenses of (48.40M) with a -14.04 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Retained earnings of 372.20M provide limited buffer against comprehensive income items of (58.90M), which is -6.32x, indicating elevated exposure to market risks.

Consolidation Items Breakdown of Revenue (2023)

Segments Breakdown of Revenue (2023)

Peer comparison

Companies in the Metal Fabrication
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ATI Ati Inc 20.40 Bn 45.86 4.45 1.91 Bn
2 CRS Carpenter Technology Corp 18.78 Bn 45.38 6.49 0.69 Bn
3 MLI Mueller Industries Inc 13.25 Bn 20.13 3.33 0.03 Bn
4 ESAB ESAB Corp 8.11 Bn 30.60 2.96 1.34 Bn
5 WOR Worthington Enterprises, Inc. 4.07 Bn 25.93 1.54 0.35 Bn
6 PRLB Proto Labs Inc 1.57 Bn 106.06 3.04 0.00 Bn
7 RYI Ryerson Holding Corp 0.89 Bn 7.72 0.16 0.86 Bn
8 IIIN Insteel Industries Inc 0.72 Bn 15.23 1.07 0.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 4.39 1.76
EV to Cash from Ops. EV/CFO 32.34 24.33
EV to Debt EV to Debt 11.52 75.42
EV to EBIT EV/EBIT 33.35 12.80
EV to EBITDA EV/EBITDA 26.05 -130.25
EV to Free Cash Flow [EV/FCF] EV/FCF 46.53 70.90
EV to Market Cap EV to Market Cap 1.08 0.24
EV to Revenue EV/Rev 4.79 1.91
Price to Book Value [P/B] P/B 11.95 3.80
Price to Earnings [P/E] P/E 45.86 22.15
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 2.28
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 40.29
Dividend per Basic Share Div per Share (Qtr) 0.00 0.30
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 265.01
Interest Coverage Int. cover (Qtr) 6.61 618.70
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 11.45 29.14
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -8.46 42.29
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 2.21 -10.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 27.73 118.55
EBIT Growth (1y) % EBIT 1y % (Qtr) 58.11 -10.94
EBT Growth (1y) % EBT 1y % (Qtr) 82.80 -12.52
EPS Growth (1y) % EPS 1y % (Qtr) 7.74 -38.14
FCF Growth (1y) % FCF 1y % (Qtr) 125.45 28.40
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 14.84 17.54
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.92 0.97
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.08
Cash Ratio Cash Ratio (Qtr) 0.35 0.67
Current Ratio Curr Ratio (Qtr) 2.50 2.58
Debt to Equity Ratio Debt/Equity (Qtr) 1.12 0.60
Interest Cover Ratio Int Coverage (Qtr) 6.61 618.70
Times Interest Earned Times Interest Earned (Qtr) 6.61 618.70
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 18.00 6.15
EBIT Margin % EBIT Margin % (Qtr) 14.37 2.67
EBT Margin % EBT Margin % (Qtr) 12.20 1.83
Gross Margin % Gross Margin % (Qtr) 21.40 26.31
Net Profit Margin % Net Margin % (Qtr) 9.70 0.14