Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 29 Sep, 25 | KALU | Buy | USD 77.7 | USD 83.0 | USD 86.0 | 10 days | Closed |
6.82%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Kaiser Aluminum Corporation, together with its subsidiaries, engages in manufacture and sale of semi-fabricated specialty aluminum mill products in the United States and internationally. It offers rolled, extruded, and drawn aluminum products used for aerospace and defense, aluminum beverage and food packaging, automotive and general engineering products. The company's automotive extrusions include extruded aluminum products for structural components, crash management systems, anti-lock braking systems, and drawn tubes for drive shafts, as well as offers fabrication services, including sawing and cutting to length. Its packaging products consist of bare and coated 3000- and 5000-series alloy aluminum coil used for beverage and food packaging industry. In addition, the company's general engineering products comprise alloy plate, sheet, rod, bar, tube, wire, and standard extrusion shapes used in various applications, including the production of military vehicles, ordnances, semiconductor manufacturing cells, electronic devices, after-market motor sport parts, tooling plates, parts for machinery and equipment, bolts, screws, nails, and rivets. Further, its rerolled, extruded, drawn, and cast billet aluminum products used for industrial end uses. The company sells its products directly to customers through sales personnel located in the United States, Canada, Western Europe, and China, as well as through independent sales agents in other regions of Asia, Latin America, and the Middle East. Kaiser Aluminum Corporation was founded in 1946 and is headquartered in Franklin, Tennessee.
Strength in General Engineering Products: Shipments in General Engineering Products grew by 3.9 million pounds, boosting conversion revenue to USD 85.7 million from USD 82.6 million year-over-year
Revenue Growth: Net sales increased by USD 50 million, rising from USD 773 million in Q2 FY24 to USD 823 million in Q2 FY25
Margin Compression: Adjusted EBITDA margin contracted by 200 basis points, declining from 20.1% in Q2 FY24 to 18.1% in Q2 FY25
Decline in Adjusted Net Income: Adjusted net income decreased by USD 7 million, falling from USD 27 million in Q2 FY24 to USD 20 million in Q2 FY25
Kaiser Aluminum faces a key investment risk from volatility in aluminum pricing and metal price lag, which can significantly affect margins and earnings despite stable conversion revenue
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 77.7 | 71.5 | 83.0 | 86.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Strong Quarterly Performance: Kaiser Aluminum Corporation reported second quarter 2025 results that exceeded internal expectations, supported by favorable market dynamics and solid operational execution. Net sales increased to USD 823 million, compared to USD 773 million in the prior-year period, driven primarily by higher realized sales prices across key end markets. Conversion revenue stood at USD 374 million, representing a modest 1% year-over-year increase.
Earnings and Profitability: Net income for Q2 2025 was USD 23 million, or USD 1.41 per diluted share, compared with USD 19 million, or USD 1.15 per diluted share, in Q2 2024. On an adjusted basis, net income was USD 20 million, or USD 1.21 per diluted share, against USD 27 million, or USD 1.63 per diluted share, in the prior year. Adjusted EBITDA came in at USD 68 million, reflecting an EBITDA margin of 18.1%, slightly below the 20.1% margin recorded in Q2 2024, highlighting some margin compression despite revenue growth.
Operational Trends by End Markets: Performance varied across end markets. Aerospace and High Strength (Aero/HS) shipments declined to 59.9 million pounds from 62.2 million pounds in Q2 2024, leading to a 5% reduction in conversion revenue. The Packaging segment saw a 6% decline in shipments, but conversion revenue improved to USD 129.7 million compared to USD 118.9 million due to stronger pricing. General Engineering Products reported a 7% rise in shipments, lifting conversion revenue to USD 85.7 million. Automotive Extrusions faced volume pressure, with shipments down 15%, though pricing supported stable conversion revenue levels.
Liquidity and Cash Flow: During the first half of 2025, Kaiser generated Adjusted EBITDA of USD 141 million, which supported USD 53 million in working capital requirements, USD 82 million in capital investments, and USD 22 million in interest payments. Additionally, the company returned USD 26 million to shareholders via quarterly dividends. As of June 30, 2025, total liquidity stood at USD 538 million, comprised of USD 13 million in cash and USD 525 million in revolving credit availability, against USD 33 million of outstanding borrowings.
Dividend and Shareholder Returns: In line with its policy of returning capital to shareholders, the company declared a quarterly dividend of USD 0.77 per share, payable on August 15, 2025, to stockholders of record as of July 25, 2025. This marks a continuation of consistent capital return despite significant capital expenditures being directed toward strategic growth initiatives.
Management Commentary: Management highlighted that the favorable business environment and metal price tailwinds supported the company’s strong performance. Chairman, President, and CEO Keith A. Harvey noted that margin levels remained above 19% during the first half of 2025. He also emphasized the company’s ongoing investments in strategic growth projects, which are expected to enhance profitability and competitiveness as the company enters 2026.
Updated 2025 Outlook: For the full year 2025, Kaiser reaffirmed its guidance for conversion revenue to grow by 5% to 10% year-over-year. Importantly, the company raised its Adjusted EBITDA outlook, now anticipating growth of 10% to 15% compared with the prior year, reflecting confidence in sustained operational momentum and market strength.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Kaiser Aluminum Corporation (NASDAQ: KALU) at the closing market price of USD 77.70, as on Sep 26 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Basic Materials Industry: Aluminum
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| KALU Kaiser Aluminum Corporation |
0.88 0.79% | 111.95 | 27.82 | 26.81 | 0.46 | 2.19 | 0.79 | 11.63 |
| ALMMF Aluminum Corporation of China Limited |
- -% | 1.37 | 7.88 | 11.48 | 0.08 | 1.16 | 0.76 | 6.68 |
| CHHQF China Hongqiao Group Limited |
- -% | 3.69 | - | 5.91 | 0.11 | 1.14 | 0.96 | 4.62 |
| CHHQY China Hongqiao Group Limited |
-3.0 6.67% | 42.00 | 5.04 | 4.72 | 0.10 | 0.91 | 0.95 | 4.57 |
| NHYKF Norsk Hydro ASA |
- -% | 7.65 | 21.31 | 12.71 | 0.07 | 1.29 | 0.08 | 0.65 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 26,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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