Earnings Preview For Alcoa

Jul. 2.12 | About: Alcoa, Inc. (AA)

Alcoa, Inc. (NYSE:AA) engages in the production and management of primary aluminum, fabricated aluminum, and alumina. The company operates in four segments: alumina, primary metals, flat-rolled products, and engineered products and solutions. The alumina segment engages in mining of bauxite, which is then refined into alumina.

The company is scheduled to report results on July 9, 2012, after the bell.

Technical Overview


The stock has a market capitalization of $9.33 billion and is currently trading at $8.75 with a 52-week range of $8.21-$16.60. The stock performance year to date is +1.74%. It is currently trading above its 20-day SMA, but below its 50-day and 200-day SMA.

Key Metrics

  • Trailing P/E: 23.97
  • Forward P/E: 9.51
  • Price/Sales: 0.37
  • Price/Book: 0.66
  • PEG Ratio: 1.90
  • Total Debt: 9.74 billion
  • Annual dividend yield: 1.40%
  • Return on Equity: 3.00%
  • Return on Assets: 2.23%

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last two quarters. In the last quarter it reported $0.10 EPS, beating analyst estimates of a $0.04 loss.

The consensus EPS is $0.06 based on 18 analysts' estimates, down from $0.32 a year ago. Revenue estimates are $5.83 billion, down from $6.58 billion a year ago. The median target price by analysts for the stock is $11.00.

The average recommendation is Overweight.

Source: Marketwatch.

Analyst Upgrades and Downgrades

  • On March 27, 2012, Stifel Nicolaus reiterated a Buy rating for the company.
  • On Jan. 10, 2012, UBS reiterated a Neutral rating for the company.
  • On Jan. 10, 2012, Dahlman Rose reiterated a Buy rating for the company.
  • On Jan. 10, 2012, Barclays Capital reiterated an Equal Weight rating for the company.

Latest Developments

  • On June 29, 2012, Alcoa announced that it has reached an agreement to sell its 351-megawatt Tapoco Hydroelectric Project to Brookfield Renewable Energy Partners.
  • On June 13, 2012, Alcoa was recognized with two awards for aluminum excellence at the American Metal Market Second Annual Aluminum Summit held in New York.
  • On May 17, 2012, Alcoa led the Metals category of nine companies in the 2012 Fortune 500 ranking of the largest U.S. companies. It also rose to 115, up from 123 last year, in the overall ranking of the largest corporations based on such metrics as revenues, profits, and market value.
  • On May 4, 2012, Alcoa announced that the board of directors declared a quarterly common stock dividend of $0.03 per share payable May 25, 2012, to shareholders of record at the close of business on May 14, 2012, and a quarterly dividend of $0.9375 per share on Alcoa's $3.75 cumulative preferred stock, payable July 1, 2012, to shareholders of record at the close of business on June 8, 2012.
  • On March 7, 2012, Alcoa announced that the U.S. Navy has awarded a $2.1 million contract to Alcoa to develop advanced welding techniques designed to reduce manufacturing costs on aluminum-intensive ships.
  • On March 5, 2012, Saudi Arabian Mining Co. announced that it has added new production line to the aluminum project, which is a joint venture with Alcoa, to produce automotive heat-treated and non-heat-treated sheet, building and construction sheet, and foil stock sheet.
  • On March 5, 2012, Saudi Arabian Mining (Ma'aden) announced that Ma'aden Bauxite and Alumina Company, which is 74.9% owned by the company and 25.1% owned by Alcoa, has signed a letter of intent to award to Hyundai Engineering & Construction Co. the construction of new Alumina Refinery, including completing detailed engineering, procurement, construction, pre-commissioning, commissioning assistance, startup assistance and training.
  • On Feb. 21, 2012, Alcoa and China Power Investment Corp. (NYSEARCA:CPI) announced that they have finalized an agreement to establish a joint venture company to produce high-end fabricated aluminum products for the China market.
  • On Jan. 23, 2012, Alcoa announced its quarterly common stock dividend of AUD 0.03 per share payable on Feb. 25, 2012, to shareholders of record date on Feb. 3, 2012, and the company's quarterly dividend of AUD 0.9375 per share on its AUD 3.75 cumulative preferred stock payable on April 1, 2012, to shareholders of record date on March 9, 2012.
  • On Jan. 9, 2012, Alcoa announced that it intends to curtail operations at three European aluminum smelters as part of a previously announced restructuring in its Global Primary Products business.
  • On January 5, 2012, Alcoa announced that it intends to close or curtail approximately 531,000 metric tons, or 12% of its global smelting capacity, to lower the company's position on the global aluminum cost curve and improve Alcoa's competitiveness.

Competitors

Alcoa operates in the aluminum industry. The company could be compared to Aluminum Corporation Of China Limited (NYSE:ACH), Century Aluminum Co. (NASDAQ:CENX), Kaiser Aluminum Corporation (NASDAQ:KALU), and Noranda Aluminum Holding Corp. (NOR). Below is the table comparison of the most important ratios between these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies and S&P 500 index for the last one-year period.

Click to enlarge image.

AA ChartClick to enlarge

Competitors' Latest Development

  • On June 11, 2012, Century Aluminum Company announced that its wholly owned subsidiary, Century Anodes B.V., has entered into a definitive agreement to purchase substantially all of the assets of the anode production facility of the former Zeeland Aluminum Company (Zalco) for EUR10 million in cash.
  • On May 23, 2012, Kaiser Aluminum Corp. announced the closing of its previously announced offering of $225.0 million in aggregate principal amount of 8.250% senior notes due 2020 (the notes) in a private transaction that is exempt from the registration requirements of the Securities Act of 1933 (the Act).
  • On May 18, 2012, Kaiser Aluminum Corp. announced that it has priced its previously announced offering of $225.0 million in aggregate principal amount of 8.25% senior notes due 2020 (the notes) in a private transaction that is exempt from the registration requirements of the Securities Act of 1933 (the Act).
  • On May 14, 2012, Kaiser Aluminum Corp. announced that it plans to offer $200.0 million aggregate principal amount of senior notes due 2020 (the notes) in a private transaction that is exempt from the registration requirements of the Securities Act of 1933 (the Act).
  • On April 25, 2012, Noranda Aluminum Holding Corp. announced that its board of directors has declared a regular quarterly dividend of $0.04 per share to be paid on May 30, 2012 to shareholders of record as of May 7, 2012.
  • On March 14, 2012, Noranda Aluminum Holding Corp. announced that the pricing of a public secondary offering of 10 million shares of its outstanding common stock by certain investment funds affiliated with or managed by Apollo Management VI, L.P.
  • On Feb. 7, 2012, Century Aluminum Company announced that its board of directors has appointed Michael Bless as president and CEO of Century. Bless had previously served as acting president and CEO.
  • On Jan. 13, 2012, Kaiser Aluminum Corp. announced that its board of directors has declared a quarterly cash dividend payment of $0.25 per share on the company's outstanding common stock, representing a 4% increase over the prior quarter's dividend.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, and Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.