ATI INC (ATI): what the price requires
At today's price, ATI INC (ATI) is priced for today's economics sustained for ~13.2 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/ATI
Headline
| Field | Value |
|---|---|
| Ticker | ATI |
| Company | ATI INC |
| Current price | $183.22/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 30.9% |
| Operating margin today | 13.9% |
| Margin expansion implied | +17.0pp |
| Must persist for | 13.2y |
| Multiple paid | 42x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 11.6% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.2 years.
Reconcile: at the x-ray's 9.3% required return this reads ~8.5 years; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.33σ |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 5.52x | 5 | expensive |
| Earnings | 4.21x | 5 | expensive |
| Relative | 3.62x | 5 | expensive |
| Growth | 1.59x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $58.59 | 3.13x | yes | FCF base $0.6B, growth 3% (input: historical growth), terminal g 3.0%, WACC 9.2%, 5yr projection |
| DCF Exit Multiple | Growth | $130.55 | 1.40x | yes | Exit EV/EBITDA: 25.1x / 30.1x / 35.1x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $88.94 | 2.06x | yes | P/E 27.7x (blended: static sector reference 14x + trailing (TTM) 60x), scenarios: 20.8x / 27.7x / 33.2x (bear / base = reference held flat / bull), EV/EBITDA 14.64x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $33.19 | 5.52x | yes | BV/sh $12.77, ROE (TTM) 24.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $53.57 | 3.42x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $115.32 | 1.59x | yes | Rev $4.6B, growth 3% (input: historical growth; tapered), Terminal P/S: 4.1x / 5.5x / 6.6x (bear / base = today's held flat / bull, cap 6x) |
| Peter Lynch Fair Value | Relative | $44.59 | 4.11x | yes | EPS $3.03, growth 15% (input: historical EPS growth), PEG=4.06 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $34.77 | 5.27x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.54B × (1−12%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $48.68 | 3.76x | yes | BV $12.77 + 5yr PV of (ROE (TTM) 24.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $29.51 | 6.21x | yes | √(22.5 × EPS $3.03 × BVPS $12.77) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $50.57 | 3.62x | yes | EBITDA $0.83B × sector EV/EBITDA 8.0x |
| FCF Yield | Earnings | $45.75 | 4.00x | yes | FCF $552.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $43.55 | 4.21x | yes | SBC-adj FCF $0.52B (FCF $0.55B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $96.33 | 1.90x | yes | EPS $3.03 × (8.5 + 2×14.7%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $14.24 | 12.87x | yes | BV $12.77 × (ROIC 10.3% / WACC 9.2%) |
| P/Sales Sector | Relative | $49.72 | 3.69x | yes | Revenue $4.59B × sector P/S 1.5x |
| PEG Fair Value | Relative | $66.89 | 2.74x | yes | EPS $3.03 × (PEG 1.5 × growth 14.7% (input: historical EPS growth)) → PE 22.1x |
| Earnings Yield | Earnings | $32.76 | 5.59x | yes | EPS $3.03 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.5b |
| Net debt / NOPAT (after-tax) | 2.61x |
| Net debt / operating income (pre-tax) | 2.30x |
| Share count CAGR (buyback) | -2.4% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- ATI makes the hardest specialty metals in the supply chain, titanium and nickel superalloys for jet engines and airframes, and it supplies 6 of the 7 most advanced jet-engine nickel alloys, with the company noting in its 10-K that one operating segment derives roughly 92% of revenue from aerospace and defense.
- The defining risk is cyclical and concentrated: ATI's fortunes track Boeing and Airbus production rates, and rising raw-material prices expose it to "cash costs that may not be fully recovered through surcharge and index pricing mechanisms," a timing risk on margins; the company also carries roughly $1.86 billion of gross debt.
- Watch the aerospace ramp against guidance: order backlog hit an all-time high of $4.1 billion, up 10% sequentially, and management raised full-year 2026 adjusted operating-earnings guidance, so the next prints test whether the multi-year demand is converting to margin on schedule.
Bull Case
ATI's balance sheet tells you what management believes about its own demand. The company is leveraged, carrying roughly $1.86 billion of gross debt against about $402 million of liquid assets, with net debt running a little over two times trailing operating income. For an industrial supplier that level of debt is a deliberate choice: it funds the qualified capacity, the forgings, the melt assets, the long-lead-time equipment, that ATI needs to serve a multi-year aerospace upcycle, and the company is buying back stock at the same time, shrinking the share count about 2.4% a year. You do not lever up and retire shares unless you are confident the order book is real and durable. The order book is: backlog reached an all-time high of $4.1 billion, up 10% sequentially in the first quarter of 2026.
The franchise behind that confidence is genuinely hard to replicate. ATI describes a position built on "long-term supply agreements on current and next-generation jet engines and airframes" with "a fully qualified asset base to meet the expected multi-year demand growth." In aerospace, qualification is the moat: an engine maker cannot simply switch alloy suppliers, because every material is certified to a specific part on a specific engine through a years-long process. Supplying 6 of the 7 most advanced jet-engine nickel alloys means ATI is designed into the programs that will run for decades, and the 10-K notes that one of its segments draws roughly 92% of revenue from aerospace and defense, with most of that from commercial jet engines. That is not commodity metal; it is engineered, qualified, single-source-leaning material with pricing power.
The demand backdrop is unusually visible. Boeing and Airbus carry multi-year backlogs, and the 10-K notes there are over 30,000 jet engines with firm orders, each of which needs ATI's alloys to be built and maintained. The first quarter showed the operating leverage this produces: adjusted operating earnings rose 19% year over year on revenue that was roughly flat to modestly higher, with aerospace and defense at 69% of sales and margins expanding in both segments, which prompted management to raise full-year guidance. When a supplier with a qualified, hard-to-displace position sits in front of a decade-long aircraft build cycle, the bull case is simply that the cycle has years to run and ATI is positioned to compound through it.
Bear Case
The variable with the most leverage over ATI is one it does not control: the rate at which Boeing and Airbus actually build airplanes. The entire thesis rests on aerospace production ramping steadily, but the airframers have repeatedly reset their own rates, and any pause, supply-chain bottleneck, or fresh production issue upstream flows directly into ATI's order pull. The 10-K is matter-of-fact that the demand depends on these multi-year backlogs converting to actual builds; a backlog is firm orders, not delivered aircraft, and the gap between the two is where ATI's revenue timing lives. The price assumes the ramp proceeds on schedule for years, and aerospace history is full of schedules that slipped.
The second exposure is raw materials and the way ATI prices around them. The company buys large quantities of nickel, titanium, and other critical inputs whose prices move with global commodity markets, and it recovers those costs through surcharge and index mechanisms that lag. The 10-K warns plainly that volatility "exposes us to cash costs that may not be fully recovered through surcharge and index pricing mechanisms," and that recently inflationary trends have lifted certain critical raw-material costs. When input prices spike, the surcharge catches up only after a delay, compressing margins in the interim; when they fall, the surcharge can work the other way. Layered on a leveraged balance sheet, that margin variability matters more than it would for a debt-free peer, and the roughly $1.86 billion of gross debt has to be serviced through the cycle, not just at the peak.
The price has already priced the good cycle and then some. Against every family of valuation method, today's $201.24 (June 27, 2026) sits well above the central estimate. The asset-value methods, anchored on a roughly $12.77 book value, land in the $30s to $50s; the earnings-power methods, capitalizing normalized profit, land in the $30s to $40s; even the peer-multiple methods, applying a materials-sector multiple, reach only the $90s. Inverted, the price pays roughly 46 times company-wide operating income and embeds operating-profit growth held near its self-funding ceiling for about 14 years, a persistence that history says only about 15% of fast-growers sustained even ten years. The recent growth rate is within what ATI has delivered in this upcycle; the stretch is the duration the price demands. Telling, too, is that the published analyst average price target sits below the current price even with a bullish consensus, which says the street loves the aerospace story but thinks the stock has run ahead of it. For a cyclical materials company, paying a peak-cycle multiple for peak-cycle earnings is the classic way to be right about the business and still lose money on the stock.
Valuation
The price is a long aerospace bet, and the methods are unanimous that it is a stretch. At $201.24, ATI trades at roughly 46 times company-wide operating income, a level that only resolves if operating profit compounds near its self-funding ceiling for about 14 years. That is a demanding duration for any company, and especially for a cyclical materials business: history suggests only about 15% of fast-growers held that pace even ten years. The reason the multiple looks so high is partly that the company is early in an aerospace upcycle with margins still expanding, so trailing earnings understate the forward picture, but even crediting the ramp, the price sits above what the standard methods support.
The disagreement among the families maps the bet. The asset-value methods, built off a book value near $12.77 a share plus the present value of returns above the cost of equity, land in the $30s to $50s, reflecting a high return on equity but a thin book base for a heavy-industry company. The earnings-power methods, capitalizing current normalized operating profit with no growth, land in the $30s to $40s. The peer-multiple methods, blending a materials-sector price-to-earnings near 14 times against the company's elevated trailing multiple, reach the $90s but no higher. Only by extending the revenue base forward at a generous rate do the growth methods climb toward the price, and even they fall short of $201. When no family reaches the price, the level is a bet beyond what any standard frame supports, a wager that the aerospace cycle runs long and ATI's qualified position lets it compound through the whole of it.
Solvency is the part of the picture that demands attention because the company is leveraged into the bet. ATI carries roughly $1.86 billion of gross debt against about $402 million of liquid assets, leaving net debt a little above two times trailing operating income. That is manageable at peak-cycle earnings and gives the company room to invest and buy back stock, which it is doing, but it removes the cushion a net-cash peer would have if the aerospace ramp stalls or raw-material costs outrun the surcharge for a stretch. The buyer at today's price is underwriting a long, steady aerospace upcycle on a balance sheet that has real debt to service through it, with the multiple, not the business, as the most likely source of disappointment.
Catalysts
The first quarter of 2026 reinforced the aerospace ramp and prompted a guidance raise. Revenue was about $1.15 billion with aerospace and defense at 69% of the total, or $798 million, growing 6% year over year, while adjusted operating earnings rose 19% to $232 million, above the high end of guidance, and adjusted earnings per share rose 39%. Management lifted full-year 2026 adjusted operating-earnings guidance to a range around $1.01 to $1.06 billion and guided second-quarter earnings to a roughly 20% increase over the prior year, so the next two prints are a direct test of whether margin expansion is holding as volume ramps. The clearest forward signal was the order book: backlog reached an all-time high of $4.1 billion, up 10% sequentially, and the company noted lengthening lead times on its most differentiated nickel and titanium products.
The demand backdrop is the durable catalyst. ATI is positioned as a Tier 1 supplier to Boeing, Airbus, and the major engine makers, and the broader industry carries a multi-year aircraft backlog measured in thousands of planes, which underpins years of alloy demand if the airframers build to plan. Analyst sentiment is firmly bullish, with a consensus that skews to strong buy, though the average published price target sits below the current price, a split that says the street believes the aerospace story while questioning the entry multiple. The next earnings report, and specifically the aerospace and defense growth rate, the margin trajectory, and any change in backlog, are the events that will confirm or challenge the long-cycle bet the price is making.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- CRS (CARPENTER TECHNOLOGY CORPORATION)
- FY2025 10-K: …Products. The SAO segment is comprised of the Company's major premium alloy and stainless steel manufacturing operations. This includes operations performed at mills primarily in Reading and Latrobe, Pennsylvania and surrounding areas as well as South Carolina and Alabama. The combined assets of the SAO operations…
- FY2025 10-K: …statements. See Note 18 to the consolidated financial statements in Item 8. "Financial Statements and Supplementary Data" for a full reconciliation of the statutory federal tax rate to the effective tax rates. Business Segment Results Summary information about our operating results on a segment basis is set forth…
- HWM (HOWMET AEROSPACE INC.)
- FY2025 10-K: …360 basis points in 2024 compared with 2023, primarily due to growth in the commercial aerospace, defense aerospace, and gas turbines markets. 25 Table of Contents In 2026, as compared to 2025, demand in the commercial aerospace, defense aerospace, and gas turbines markets is expected to increase, including engine…
- FY2025 10-K: …are excluded from net margin and Segment Adjusted EBITDA. The Company's CODM considers forecast-to-actual variances for Segment Adjusted EBITDA when allocating resources across the Company's reportable segments. Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Differences…
- CSTM (CONSTELLIUM SE)
- FY2025 10-K: …markets in regions with abundant natural resources, low-cost labor and energy, and lower environmental and other standards may pose a significant competitive threat to our business. Moreover, technological innovation is important to our customers who require us to lead or keep pace with new innovations to address…
- FY2025 10-K: …ability to maintain or raise prices in the future may be limited, including during periods of raw material and other cost increases. If we are forced to reduce or maintain prices or reduce volumes of production during periods of increased costs, or if we lose customers because of consolidation, pricing or other…
- KALU (KAISER ALUMINUM CORP)
- FY2025 10-K: …to Net sales and Adjusted EBITDA to Net income, see below in "Results of Operations - Selected Operational and Financial Information." Metal Pricing Policies A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum and certain alloys, thereby…
- FY2025 10-K: …30% is sold to metal service centers. For the years ended December 31, 2025 and December 31, 2024, our largest customer accounted for 16% of Net sales. While the loss of this customer could have a material adverse effect on us, we believe that our long-standing relationship with the customer is good and that the risk…
- AA (Alcoa Corp)
- FY2025 10-K: …is dependent upon the type of product we are selling. The market for primary aluminum is global, and demand for aluminum varies widely from region to region. We compete with commodity traders, such as Glencore, Trafigura, Vitol, Mercuria and Gunvor, and aluminum producers, such as Emirates Global Aluminum, Norsk…
- FY2025 10-K: …position depends, in part, on our ability to operate as an integrated aluminum value chain, leverage innovation expertise across businesses and key end markets, and access an economical power supply to sustain our operations in various countries. See Part I Item 1 of this Form 10-K under caption Competition. We may…
- CENX (Century Aluminum Company)
- FY2025 10-K: …withstand reductions in price or other adverse industry or economic conditions. Competitive Advantages While we face significant competition, we also have several competitive advantages. We believe our key competitive advantages are: Focus on Primary Aluminum Business. We operate principally in the production of…
- FY2025 10-K: …production capacities as compared to the year ended December 31, 2024. Our net sales are impacted primarily by the LME price for aluminum, regional and value-added premiums, and the volume and product mix of aluminum we ship during the period. In general, our results reflect the LME and regional premium pricing on an…
- STLD (Steel Dynamics, Inc.)
- FY2025 10-K: …We compete in numerous industry sections, most significantly tied to the construction, automotive, and other manufacturing sectors. In many applications within these industry sections, steel competes with other materials, such as aluminum, cement, composites, plastics, carbon fiber, glass, and wood. Some of our…
- FY2025 10-K: …75% controlling equity interest in SDI Biocarbon Solutions, LLC. Steel operations accounted for 72% and 69% of our consolidated net sales during 2025 and 2024, respectively. See Item 1. Business for further information on Steel Operations segment operations. Steel Operations Segment Shipments (tons): …
- CMC (COMMERCIAL METALS COMPANY)
- FY2025 10-K: …This is a strategic advantage when imports increase as our steel mills can continue to supply our fabricators. Contract pricing that is utilized for these operations helps to stabilize short-term volatility. The construction-related solutions and value-added products within our Emerging Businesses Group segment…
- FY2025 10-K: …and meeting our business goals and objectives, and we depend on a qualified labor force for the manufacture of our products. The impact of labor shortages and increased competition for available workers may increase our costs or impede our ability to optimally staff our facilities and could have an adverse impact on…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 FY2026 results and FY2025 10-K · Q1 FY2026 results, April 2026 · analyst consensus, MarketBeat / TipRanks, 2026 · analyst consensus, MarketBeat / public.com, 2026