What to Expect From Alcoa Earnings

Commodities & Metals

Published: January 11, 2016 11:35 am

Last Updated: March 13, 2020 10:05 pm

Alcoa Inc. (NYSE: AA) is scheduled to release its fourth-quarter earnings after the markets close on Monday. The consensus estimates from Thomson Reuters call for $0.02 in earnings per share (EPS) on $5.29 billion in revenue. In the same period of the previous year, the company posted EPS of $0.33 and $6.38 billion in revenue.

The company hasn’t gone much of anywhere since the 2008 financial crisis, and neither have its revenues. Alcoa is as boring a stock as you can own without having the defensive advantages of an AT&T or a sizable dividend for income.

Alcoa is essentially a leveraged play on base metal prices, especially aluminum, which plunged in 2015. Constant money printing puts a solid floor under Alcoa by supporting aluminum prices, and the stock seems to have moved in something of a lazy disorganized sine wave since 2008. Multi-decade lows are not far from where we are now, so this one is especially appropriate for those who like to try to pick long-term bottoms. Call it a beginner’s exercise in bottom picking.

Previously Alcoa announced that it would be splitting the business into an upstream company, which will retain the Alcoa name, and a value-add company that will have a new name. We can expect an update on the split in this earnings report.

ALSO READ: 5 High-Yield Defensive Stocks That Can Thrive in the 2016 Market Panic

A few analysts weighed in on Alcoa ahead to the earnings report:

Macquarie upgraded it to Outperform from Neutral and raised the price target to $13 from $11.
Stifel reiterated a Buy rating with a $14 price target.
Citigroup reiterated a Buy rating with a $12 price target.
Nomura downgraded it to Neutral from Buy and lowered the price target to $8 from $14.

There has only been about a week of trading in 2016, and Alcoa already has taken a massive hit, as the stock is down 18% year to date. However it doesn’t get any better when we look at the past 52 weeks, with shares down nearly 50%.

Shares of Alcoa were last seen trading down 0.3% at $8.05, with a consensus analyst price target of $11.46 and a 52-week trading range of $7.81 to $17.10.

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