ATI Inc. ATI shares have rallied 27.6% over the past three months.The company has also outperformed the Zacks Aerospace - Defense Equipment industry’s 5.6% decline and the S&P 500’s roughly 1.7% increase over the same period.
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Let's take a look at the factors driving ATI stock.
Record Backlog, Capacity Expansions & Raised Outlook Drive ATI
ATI's growth is being driven by strong demand across its core market segments, particularly aerospace and defense, supported by a record backlog. The backlog reached $4.4 billion at the end of the second quarter, up 18% year over year, providing strong revenue visibility as aircraft production and defense demand continue to expand.
Aerospace remains a key growth engine, with increasing production rates for aircraft and next-generation jet engines boosting demand for ATI's proprietary nickel-based superalloys, titanium products, forgings and specialty materials. The growing adoption of next-generation jet engines further strengthens this opportunity, as these platforms require higher content of advanced alloys per engine. Increasing defense opportunities and long-term customer agreements are also providing greater revenue visibility. The visibility is also underlined by optimistic outlook revisions in both segments.
ATI is further strengthening its position through targeted investments that expand existing capacity. Its nickel investments are targeted to raise nickel capacity by 15-20% by early 2028 from year-end 2025 levels and support about $350 million of incremental annual nickel-based revenues by 2028.
ATI's profitability has also improved sharply. Second-quarter adjusted EBITDA rose 37% year over year to $284 million, while the adjusted EBITDA margin expanded to 22.6% from 18.2% a year earlier.
The company also raised its full-year 2026 adjusted EBITDA guidance to $1.135-$1.185 billion from $1.01-$1.06 billion and increased adjusted EPS guidance to $4.90-$5.18 from $4.20-$4.48. Adjusted free cash flow guidance was also raised to $550-$600 million.
Operational improvements, structural changes in the portfolio, pricing gains and a richer product mix are helping ATI generate stronger incremental margins. These factors, along with the “elevATIon" program, are intended to increase productive output from existing assets. Together, these gains are expected to act as a catalyst to ATI’s upside growth momentum.
ATI’s Zacks Rank & Other Key Picks
ATI currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the Basic Materials space are Neo Performance Materials Inc. NOPMF, Carpenter Technology Corporation CRS and Avient Corporation AVNT.
While NOPMF currently sports a Zacks Rank #1, CRS and AVNT carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NOPMF’s 2026 earnings is pinned at $1.4 per share, indicating a 185.71% year-over-year increase. NOPMF’sshares have gained 104% over the past year.
The Zacks Consensus Estimate for CRS’ fiscal 2027 earnings is pegged at $12.92 per share, indicating a rise of 20.07% year over year. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 8.39%.
The Zacks Consensus Estimate for AVNT’s current-year earnings is pinned at $3.2 per share, indicating a 13.48% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 3.4%. AVNT’sshares have gained 18.6% over the past year.
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ATI Inc. (ATI): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).