Can ATI Sustain Its Robust Free Cash Flow Momentum in 2026?

ATI Inc. ATI reported an adjusted free cash flow of $230.3 million in the fourth quarter of 2025, reflecting a 42% year-over-year decline. Despite the fourth-quarter dip, the full-year cash flow performance showed solid improvement with 53.4% growth on a year-over-year basis, logging $379.8 million. The strong cash flow profile was largely due to cash from operating activities increasing to $614.3 million for the year from $407.2 million in the previous year.

The company, from its previous successes and newer initiatives, expects to maintain consistency in its cash flows by reducing seasonality. For 2026, adjusted free cash flow is projected between $430-$490 million, indicating a 21% year-over-year increase at the midpoint.

ATI is poised to benefit from its demand scenario, showing signs of further growth in the core markets. The company will also derive its upside from its moat of possessing proprietary products and long-term agreements that ensure consistent market share, better mix and higher pricing power. Its strategic capital spending plans will also support additional growth through modernization and high-margin arenas. Strong end-market demand and healthy margins are likely to continue driving ATI’s free cash flow in 2026.

Among its major peers, Carpenter Technology Corporation CRS generated strong operating cash flows in the second quarter of fiscal 2026, resulting from improvements in working capital and higher earnings. Carpenter Technology logged operating cash flows of roughly $132.2 million in the second quarter, up 95% year over year, while adjusted free cash flow surged 123% to around $85.9 million. For fiscal 2026, CRS expects to generate adjusted free cash flow of at least $280 million.

Howmet Aerospace Inc. HWM recorded fourth-quarter free cash flow of roughly $530 million, more than 40% growth from the previous year’s $378 million. For the full year, Howmet’s free cash flow was a record $1,431 million, up 46% year over year. The upside was backed by robust operational results. Howmet expects free cash flow for full-year 2026 to be between $1,550-$1,650 million.

The Zacks Rundown for ATI

Shares of ATI have shot up 184.4% in the past year compared with the Zacks Aerospace - Defense Equipment industry’s growth of 37.9%.

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From a valuation standpoint, ATI is currently trading at a forward price-to-sales multiple of 4.03, a significant discount to the industry average of 12.24X. It carries a Value Score of D.

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The Zacks Consensus Estimate for ATI’s 2026 and 2027 earnings implies a year-over-year rise of 29.01% and 21.19%, respectively. The EPS estimates for 2026 and 2027 have been trending higher over the past 30 days.

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ATI stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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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).

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