Key Points
Engine manufacturers are ramping up production as the supply chain heals, which is excellent news for ATI.
Next year is set up to be one of strong growth in aircraft manufacturing.
Shares in ATI (NYSE: ATI) rose as much as 12.9% in early trading today on strong third-quarter earnings and a hike in full-year guidance that suggests the company will enter 2026 with excellent trading momentum.
ATI is not in isolation
The company produces high-performance materials and components, as well as advanced alloys, with about 86% of its revenue in the aerospace and defense markets. Getting into more granular detail, 60% of its revenue comes from products for commercial jet engines.
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It's a market with a relatively small number of customers, ultimately driven by aircraft production at Boeing and Airbus and by engine manufacturing at GE Aerospace, RTX's Pratt & Whitney, and Rolls-Royce. Competitors include companies like Carpenter Technology and Howmet Aerospace.
The good news is that a plethora of those companies have reported accelerating growth and raised their full-year guidance. GE recently upgraded its estimate for LEAP engine deliveries in 2025 and raised guidance on burgeoning services orders and revenue. RTX raised Pratt & Whitney's profit guidance, and Carpenter Technology shares blasted higher as management sees growth accelerating.
Image source: Getty Images.
ATI's growth potential
Suppose there's one recurring theme in all these results, including ATI. In that case, it's that the aerospace supply chain is healing, parts are becoming more available, and that's boosting growth outlooks and OEM growth outlooks, as is the recent Federal Aviation Administration's approval for Boeing to ramp 737 MAX production to 42 a month from 38.
This improving environment encouraged ATI to raise its full-year earnings per share guidance to $3.15-$3.21 from $2.90-$3.07 -- a significant hike, given we are already in the fourth quarter. It bodes well for 2026, as does the rest of the guidance from its key customers and rivals.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends GE Aerospace, Howmet Aerospace, RTX, and Rolls-Royce Plc. The Motley Fool has a disclosure policy.