CENX's Margins Expand Despite Cost Pressures: Can Growth Sustain?

Century Aluminum Company CENX has been grappling with rising costs and expenses over time. CENX reported an uptick in operating expenses during 2025. The company’s cost of sales rose 10.9% year over year, while SG&A expenses climbed approximately 41% year over year. Other operating expenses also increased more than 100% year over year in 2025.

Key factors behind the company’s high costs included costs tied to key production inputs such as alumina, electrical power and carbon products, which together accounted for more than 84% of its cost of goods sold in 2025. Also, volatility in energy prices and raw material markets has added pressure. Operational disruptions, including equipment issues at its Grundartangi facility, have also impacted cost efficiency.

Despite these headwinds, Century Aluminum has been focusing on improving operational performance and maintaining profitability. The company’s focus on cost control, efficiency improvements and a shift toward value-added aluminum products has helped support margins. In 2025, its gross margin increased 240 basis points to 10.1%. Increased sales of premium products, which are priced higher than standard-grade aluminum, have contributed positively to the company’s margin profile.

Ongoing investments to optimize production and enhance capacity utilization are aiding overall operational efficiency as well. The company’s focus on cost discipline and supply-chain optimization is likely to support ongoing margin improvement.

Performance of CENX’s Peers

Alcoa Corporation AA has been coping with the adverse impacts of high operating costs. In 2025, the cost of sales rose 6% year over year. Alcoa’s selling, general and administrative expenses also increased 9% in the year. The increase in operating expenses, if not controlled, might adversely impact Alcoa’s margins in the quarters ahead.

Constellium SE CSTM is facing cost pressure. Constellium’s cost of sales increased 13.5% in 2025. Constellium’s SG&A expenses rose 6.1% year over year in the same period.

CENX’s Price Performance, Valuation and Estimates

Shares of Century Aluminum have gained 25.1% in the past three months against the industry’s decline of 4.4%.

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From a valuation standpoint, CENX is trading at a forward price-to-earnings ratio of 7.4X, below the industry’s average of 15.58X. The company carries a Value Score of C.

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The Zacks Consensus Estimate for CENX’s 2026 earnings has increased over the past 60 days.

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The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Alcoa (AA): Free Stock Analysis Report

Century Aluminum Company (CENX): Free Stock Analysis Report

Constellium SE (CSTM): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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