Has Alcoa Found a Bottom?

Commodities & Metals

Published: July 8, 2015 4:41 pm

Last Updated: April 27, 2020 10:47 pm

Alcoa Inc. (NYSE: AA) reported its second-quarter financial results Wednesday after the markets closed. The aluminum giant had $0.19 in earnings per share (EPS) on $5.9 billion in revenue compared to Thomson Reuters consensus estimates of $0.23 in EPS on $5.79 billion in revenue. The same quarter from the previous year had $0.18 in EPS on $5.84 billion in revenue.

The company did not give guidance at this point. Therefore this report is not entirely complete and investors should hold off on judgment until a fuller picture is available. There are consensus estimates of $0.20 in EPS on $5.88 billion in revenue for the third quarter and $0.91 in EPS on $23.61 billion in revenue for the full year.

In terms of its segments Alcoa had:

Engineered Products and Solutions had after-tax operating income (ATOI) of a record $210 million up 4% year over year
Global Rolled Products had ATOI of $76 million up 9%
Alumina had ATOI of $215 million down $6 million sequentially from $221 million, and up $177 million year over year from $38 million
Primary Metals had ATOI of $67 million, down $120 million sequentially from $187 million, and down $30 million from $97 million

Klaus Kleinfeld, Chairman and CEO, commented on earnings:

We continue to transform Alcoa; our portfolio reshaping combined with smart investments in growth markets is delivering strong results. Our value-add businesses are outperforming, with record profitability in the downstream and exciting profitable growth in the midstream. Recent acquisitions are fully on track, and paired with our innovations we are cementing Alcoa’s position as a premier aerospace and automotive partner. In the upstream, our Alumina business delivered its best first half since 2007 and our lower cost metals business showed resilience in the face of strong market headwinds. Productivity and cash generation were excellent.

At the end of the quarter Alcoa had cash and cash equivalents of $1.31 billion compared to the end of 2014 where it had $1.88 billion.

Shares of Alcoa closed Wednesday down 5.1% at $10.50. Following the release of the earnings report, shares were up 0.8% at $10.58. The stock has a consensus analyst price target of $15.37 and a 52-week trading range of $10.39 to $17.75.

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