The reduction recommended on the current stock price of Kaiser Aluminum reflects a valuation of 9 times projected for the company’s value to EBITDA in FY25. However, the company's major sector of operation, the aerospace/high strength division, is expected to witness strong financial growth in the first quarter of 2025. For the rest of the year, the division, accounting for 36 per cent of sales and a significant portion of EBITDA, shall witness financial growth by an increased production rate in original equipment manufacturer (OEM).
However, certain challenges can change the prediction for Kaiser Aluminum in the near term. Challenges like tariffs, which may further affect consumer spending, are expected to show a slowdown, indicating excessive recession concerns. Nonetheless, the company is expected to spot a positive outlook for the company by continuing its aerospace replacement cycle in the long term.
As of March 2025, Kaiser Aluminum was at a 52-week low where its stock price reached USD 63.13 as a result of market fluctuations for the year 2024. This showed a direct effect on the company's stock price irrespective of maintaining a perfect dividend payment for over 19 years of its operation.
Apart from the aerospace division of the company, the automotive sector provides 9 per cent of the total sales. But it is currently facing challenges due to the tariff and rising uncertainty. Similarly, the general engineering division of Kaiser Aluminum, which marks a total of 21 per cent of sales, is also navigating challenges at this moment, such as supply chain disruptions, tariffs and broader economic conditions. However, despite the ongoing challenges, the company still expects to receive benefits from reshoring initiatives and reduced import competition.
The packaging segment of the company yields a total of 33 per cent of sales and currently remains at a strong point because of the rapid secular growth. This segment shall also gain momentum from the higher-margin roll coat line. Adhering to this, the first shipments with expanded capacity from the company shall be released in the second quarter.
