What to Expect From Alcoa Earnings

Commodities & Metals

Published: October 7, 2014 11:55 am

Last Updated: October 7, 2014 11:56 am

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Alcoa Inc. (NYSE: AA) is set to report its third-quarter earnings on Wednesday after the market closes. With the market having used Alcoa in the past as a barometer for earnings season, all eyes will be watching the report closely. Fortunately or unfortunately, Alcoa is no longer one of the 30 Dow Jones Industrial Average components.

Thomson Reuters has consensus earnings estimates of $0.23 in earnings per share and $5.85 billion in revenues. The same quarter in the previous year posted earnings of $0.11 per share and $5.76 billion in revenues. Estimates for the fourth quarter are $0.20 in earnings per share and $5.79 billion in revenues.

In the days prior to its earnings release, Alcoa announced that it will open the world’s largest aluminum-lithium plant. The total cost of the plant was set at $90 million and it looks to produce over 20,000 metric tons of aluminum lithium. This plant is being built in response to the growing demand for aluminum lithium in the aerospace market from companies such as Boeing and Airbus.

Alcoa has also been distancing itself from being so dependent just on aluminum and alumina prices. That move into large products for planes and autos has been a twist of fortune, for the better. Alcoa’s management finally can distance itself from the old projection that the global aluminum market will double by 2020. If that occurs, perhaps Alcoa’s new efforts will have made it a self-fulfilling prophecy.

The company has seen its share price increase about 8% from the previous quarter to Monday’s close $15.99 from the July 1 close $14.77. Over the course of the year, Alcoa has increased just over 50% from the January 1 close $10.46.

Shares of Alcoa were up 0.5% to $16.07 in the first two hours of trading on Tuesday, but the real action will likely take place on Wednesday ahead of the earnings. For that reason, we have omitted any detailed chart and options trading analysis and will include that in a follow-on report on Wednesday morning.

The aluminum giant’s stock has a consensus analyst price target of $16.88 and a 52-week trading range of $7.88 to $17.36. It has a market cap of $19 billion.

ALSO READ: 7 Must-Know Earnings Season Surprises

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