Zacks Initiates Coverage of Ampco-Pittsburgh With Neutral Recommendation

Zacks Investment Research has recently initiated coverage of Ampco-Pittsburgh Corporation AP, assigning a "Neutral" recommendation to the company's shares. This assessment comes amid a mixed outlook for the company, which has been making notable strides in the specialty metal products and customized industrial equipment space despite industry challenges.

AP, headquartered in Carnegie, PA, manufactures and sells highly-engineered and high-performance specialty metal products and customized industrial equipment throughout the world. It operates via two reportable segments — Forged and Cast Engineered Products (FCEP) and Air and Liquid Processing (ALP).

Ampco-Pittsburgh reported a solid rebound in profitability in the first quarter of 2025 amid revenue decline. Adjusted EBITDA soared 72.5% to $8.8 million from $5.1 million, while net income was $1.1 million against a net loss of $2.7 million a year ago. These gains stemmed from better pricing, improved operating efficiency and a more favorable trade environment that could prove durable over time.

On the financial front, AP continues to operate under a heavy debt load — $127.3 million as of March 31 — and posted negative operating cash flow in the latest quarter. Its credit facility remains largely untapped.

The research report highlights several key factors that could drive Ampco-Pittsburgh’s future growth. ALP segment recorded its highest-ever order intake in first-quarter 2025, driven by demand from the nuclear, defense, and pharmaceutical industries. U.S. tariffs on steel and aluminum imports have doubled, strengthening domestic players like AP, while China has sharply reduced tariffs on U.S.-produced rolls. This shift could open up $2-$5 million in incremental sales opportunities over the next two quarters. Additionally, Ampco-Pittsburgh’s ongoing efforts to streamline its U.K. operations with a planned closure of a loss-making facility are expected to significantly reduce drag on profitability.

However, potential investors should consider certain risks outlined in the report. Ampco-Pittsburgh’s FCEP segment remains under pressure. Although capital investment has bolstered operational efficiency, with segment income up nearly 37.7% year over year, overall revenues in the unit continue to slide. Weak global steel demand and foreign currency headwinds have contributed to a 6.4% decline in sales in first-quarter 2025. Additionally, AP’s $127.3 million debt load and ongoing asbestos liabilities weigh on financial flexibility.

Ampco-Pittsburgh’s stock has significantly outperformed its industry peers and the broader market over the past year. The valuation metrics for the company indicate a cautiously optimistic opportunity for those willing to tolerate near-term uncertainty.

For a comprehensive analysis of Ampco-Pittsburgh’s financial health, strategic initiatives, and market positioning, you are encouraged to view the full Zacks research report. This in-depth report provides a detailed discussion of the company's operational strategies, financial performance, and the potential risks and opportunities that lie ahead.

Read the full Research Report on Ampco-Pittsburgh here>>>
 

Note: Our initiation of coverage on Ampco-Pittsburgh, which has a modest market capitalization of $74.4 million, aims to equip investors with the information needed to make informed decisions in this promising but inherently risky segment of the market.

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

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