GICS Sector : Industrials
ATI Inc.manufactures and sells specialty materials and components worldwide.The company operates in two segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S).
ATI's Q4 2025 revenue came in at $1.2 billion, with adjusted EBITDA of $232 million and an adjusted EBITDA margin of 19.7%. For the full year 2025, revenue was $4.6 billion, up 5% year over year, with adjusted EBITDA exceeding $859 million and adjusted EPS at $3.24. The actual EPS for Q4 was $0.93, beating estimates of $0.89. The company's financial performance was driven by strong demand in aerospace and defense, with jet engine sales up 21% year over year, and defense up 14%.
Publication Date: Feb -16
For 2026, ATI is guiding to adjusted EBITDA of $1 billion, a 16% increase year over year. The company is expecting adjusted free cash flow of $460 million, a 21% year-over-year increase. Rob Foster, the new CFO, mentioned that the company is prioritizing A&D and specialty energy, with A&D sales mix expected to represent more than 70% of sales for the full year 2026. As Kimberly Fields noted, "We're confident in our outlook for 2026, with adjusted EBITDA guidance of $1 billion, a 16% increase year over year."
The aerospace and defense segment was a key driver of growth, with revenue up 14% year over year in Q4. The company is seeing robust growth in jet engine sales, with a 21% year-over-year increase. Defense revenue grew 14% in 2025 and is expected to accelerate to mid-teens in 2026. Naval nuclear is around 35-40% of defense revenue, and missile is around 20%.
Using the current stock price, ATI's P/E Ratio is 48.38, indicating a relatively high valuation. The EV/EBITDA ratio is 26.08, which is also on the higher side. However, the company's ROE is 22.69%, indicating strong profitability. The Net Debt / EBITDA ratio is 1.66, suggesting a manageable debt burden.
ATI is expanding its capacity to meet growing demand, particularly in the aerospace and defense segment. The company is adding a new VIM furnace, which will increase capacity by around 8-10% and is expected to be operational by 2028. This expansion is expected to support next-generation alloy platforms like LEAP and GTF.
Looking ahead, ATI expects substantial price opportunities and mix to drive growth in 2026, with half of the uptick attributed to price and the other half to volume. The company is also expecting continued growth in demand from engine OEMs, particularly as it continues to gain share and expand its content with customers like Pratt. Analysts estimate next year's revenue growth at 8.4%, indicating a continued strong performance.
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ATI Inc.'s High Performance Materials & Components segment growth of 6.5% is driven by increasing demand for advanced materials in aerospace and defense, growth in commercial aerospace, and rising adoption of electric vehicles, which require high-performance materials. Additionally, ATI's strategic investments in research and development, and its focus on operational efficiency, have contributed to the segment's growth.
ATI Inc.'s Advanced Alloys & Solutions segment growth of 6.8% is driven by increasing demand for high-performance materials in aerospace and defense, growth in commercial aerospace, and rising adoption of electric vehicles. Additionally, ATI's strategic investments in research and development, as well as its focus on operational efficiency, have contributed to the segment's growth.
High-performance graphics processing units (GPUs) for gaming, professional visualization, and machine learning applications
Professional-grade graphics processing units (GPUs) for workstations, data science, and AI development
High-performance accelerators for machine learning, deep learning, and high-performance computing
Physically-based rendering engine for film, television, and architectural visualization
Image sharpening technology for improved image quality and detail
Low-latency technology for improved gaming performance
On-screen display technology for real-time performance monitoring and customization
The threat of substitutes for ATI Inc. is medium due to the presence of alternative graphics processing units (GPUs) from competitors like NVIDIA.
The bargaining power of customers is low due to the specialized nature of ATI's products, making it difficult for customers to switch to alternative suppliers.
The bargaining power of suppliers is medium due to the dependence on a few key suppliers for components, but ATI's large scale of operations provides some negotiating power.
The threat of new entrants is low due to the high barriers to entry in the GPU market, including significant research and development costs and the need for specialized expertise.
The intensity of rivalry is high due to the intense competition between ATI and NVIDIA, with both companies constantly innovating and improving their products to gain market share.
| Value | |
|---|---|
| Debt Weight | 61.35% |
| Debt Cost | 3.95% |
| Equity Weight | 38.65% |
| Equity Cost | 9.78% |
| WACC | 6.20% |
| Leverage | 158.75% |
Value: 4.3
Growth: 7.1
Quality: 7.9
Yield: 2.0
Momentum: 9.0
Volatility: 8.0
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Volatility: 6.3
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Growth: 7.3
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Volatility: 4.0
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Value: 3.1
Growth: 4.7
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Yield: 0.0
Momentum: 3.5
Volatility: 6.0
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