Will Alcoa Help Metal Outlook in 2007?

Alcoa (AA) is trading up some 4% in after-hours trading.  The company posted $0.74 EPS and revenues were $7.84 Billion; estimates were $0.65 and $7.6+ Billion.  These EPS numbers were ex-items and there were gains and losses outside of this, but the company’s strong stance and outlook are leading the way per Alain Belda, the CEO & Chairman of Alcoa:

"As we enter 2007, market fundamentals remain strong. We will generate more than enough cash this year to fund our capital investment programs. We will continue to deliver strong results, invest in our future, and keep a strong balance sheet," said Belda. "And, we continue to manage our investment decisions and portfolio actions on the basis of contribution to profitable growth."

Alcoa has been very decoupled from the other aluminum trends because of internal issues, but this report weas good enough that it has some of the others in the group up after hours: Alcan (AL) nil; Novelis (NVL) nil; Aluminum Corp of China (ACH) +3.8% at $22.57; Century Aluminuaam (CENX) +2.7% at $40.47; also this was even good enough that US Steel (X) is up 0.8% at $70.75.

Jim Cramer on CNBC back on December 18, 2006 said Alcoa would be acquired or taken private by this time next year, so we’ll have to see if this acts as a tutning point for Alcoa.  The stock is still well under the mid-point of the $26.39 to $36.96 trading range seen in the stock over the last 52-weeks.  It has been dead money for some time as ittraded as high as $39.44 in january 2004 and $40.50 back in December 2001and almost $46.00 back in May 2001.

Jon C. Ogg
January 9, 2007