By Mark Vickery
Alcoa Inc. (AA) has kicked off another earnings season with its first quarter posting of 27 cents earnings per share (EPS) on revenues of $5.96 billion. This met the Zacks Consensus Estimate on the EPS side, but was down slightly from the $6.112 billion expected on the revenue side.
Shares of Alcoa, the U.S.'s top producer of aluminum, had ticked down 0.84% in regular Monday trading by 15 cents per share to close at $17.77 before the company posted its earnings numbers. Since the earnings have been released, after-market trading for Alcoa went back up a few cents before dropping roughly 3%.
Analysts had been revising their first quarter estimates higher for Alcoa over the course of the past 90 days. This clearly reflected the recent increases in the price of aluminum, which arrived a bit late to the party compared to the gains in several other important commodities.
While it is true that aluminum is an important metal in the construction of autos, airplanes, etc., it is not exactly "Dr. Copper." In fact, if Alcoa did not mark the traditional start to quarterly earnings season, its earnings report would like receive less coverage than it currently does.
That said, while Alcoa's numbers this afternoon are not eye-popping, they do solidify the narrative that the world economy has finally started to regain its solid footing. Today's earnings report marked the highest EPS for Alcoa since the company posted 37 cents per share back in second quarter 2008 - before the onset of the Great Recession. And year over year, Alcoa's EPS is even more impressive: In the first quarter of 2010, the company posted only 10 cents per share in an earnings miss of 16.7%.
Analysts also have a positive outlook for Alcoa's second quarter 2011 results. Not only is the Zacks Consensus Estimate at an even-stronger 35 cents per share, upward revisions have consistently pushed the consensus higher over the past few months.
Time will tell if Alcoa's earnings will help illustrate what is to be expected elsewhere in first quarter 2011 results. But two narratives analysts had been looking for do seem to be affirmed by Alcoa's numbers: That the global economy continues to improve, though it is doing so without the huge, gaudy gains we have seen over the past few quarters.