Alcoa Inc. (NYSE: AA) is scheduled to report its first-quarter financial results after the markets close on Monday. The consensus estimates call for $0.02 in earnings per share (EPS) on $5.14 billion in revenue. In the same period of last year, the aluminum producer posted EPS of $0.28 and $5.82 billion in revenue.
This company is undergoing a transformative restructuring that appears promising over the long term. However the near term is more of a problem. This well-managed blue-chip materials company is facing challenges from slumping commodity prices, the slowdown in China and unfavorable currency translation.
Recently, earnings have been in free fall, and estimates may continue to decline until the planned split-up of the company in the second half of 2016, leading to further share price weakness.
The planned split will create one company focused on commodity aluminum production and another focused on higher-value engineered products, including its automotive and aerospace businesses. The upstream aluminum products company will retain the Alcoa name.
A few analysts weighed in on Alcoa prior to the release of the earnings report:
- Berenberg Bank reiterated a Hold rating.
- Macquarie has an Outperform rating with a $12 price target.
- Deutsche Bank reiterated a Buy rating.
- Nomura reiterated a Neutral rating.
- Merrill Lynch reiterated a Neutral rating.
- Credit Suisse has an Outperform rating with a $13 price target.
So far in 2016, Alcoa has underperformed the broad markets, with the stock down nearly 5%. Over the past 52 weeks, the stock is down 28%.
Shares of Alcoa were trading up 3.5% at $9.70 on Monday, with a consensus analyst price target of $10.61 and a 52-week trading range of $6.14 to $14.29.
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