May. 15, 2014, 4:49 PM
- Negotiators for Alcoa (AA) and unionized workers at 10 U.S. plants remain divided on several key issues, including wages and healthcare premium increases, ahead of tonight's midnight deadline of their labor contract.
- At least four United Steelworkers' local unions have voted to give their negotiators the right to authorize a strike if a contract cannot be reached.
May. 12, 2014, 3:28 PM
- Alcoa (AA +4.3%) jumps to within pennies of its 52-week high following a FT report yesterday that the company will reduce aluminum production in Brazil and move into energy trading.
- A long drought caused many of Brazil's hydropower dams to dry up, which has helped push up spot energy prices; Alcoa's plan is to take advantage by selling some of the power saved by reducing production for higher profits.
- Brazil's national electricity operator estimates power supplies will drop by up to 6% if reservoir levels, currently at 38% capacity, continue to fall; hydro accounts for more than 70% of Brazil’s energy supplies.
May. 1, 2014, 7:05 PM
Apr. 17, 2014, 9:53 AM
- Alcoa (AA +0.8%) is upgraded to Sector Perform from Underperform with a $15 price target, up from $12, at RBC, based on the recent stronger than expected performance in the alumina and global rolled products businesses.
- The firm admits that it had underestimated the upside potential for the shares and now sees lower downside risk than before, but it believes much of the business improvement and near-term growth likely is reflected in the share price.
Apr. 11, 2014, 5:23 PM
- Alcoa's (AA) credit rating is cut to junk - one level below investment grade to BB+ from BBB- - at Fitch, which expects earnings this year and next to continue to reflect weakness in the price of aluminum while the debt-to-EBITDA ratio rises to as much as 2.9.
- "Alcoa is aggressively transforming the company," it says in a statement, noting that its debt is at the lowest level since 2007 and it has no significant maturities due before 2017.
- Alcoa was cut to junk by Moody’s last May; S&P rates the company's debt BBB-, its lowest investment-grade level.
Apr. 9, 2014, 12:20 PM
- Analysts are generally bullish on Alcoa (AA +3.5%) after Q1 results exceeded expectations
- Goldman Sachs maintains a Buy rating and $15 price target, believing the company has strongly positioned itself to fully benefit from the growing downstream aluminum end markets, aerospace and automotive, where it sees multi-year positive trends with both top line and bottom line growth.
- Stifel raises its price target to $15 from $14 and Cowen lifts its target to $12 from $11 (Briefing.com).
- Nomura expresses a note of caution, however, reiterating its Neutral rating and $8 price target, saying the stock's premium valuation is at risk.
Apr. 9, 2014, 8:39 AM
- Alcoa (AA) +3.9% premarket after Q1 earnings topped estimates and the company said it still expects aluminum demand to rise ~7% this year.
- In the earnings conference call, CEO Klaus Kleinfeld predicted strong profit growth from its products businesses as it attempts to reduce its reliance on aluminum, with exciting prospects in industries such as aircraft and cars as it seeks more independence from the market swings of recent years.
- Alcoa’s primary aluminum production operations lost $15M in the quarter, vs. a $39M profit in the year-ago period, and AA has shut down ~28% of its smelting capacity since 2007 with 21% of remaining capacity (~800K metric tons/year) on temporary shutdown; Kleinfeld said the moves were painful but necessary, and AA will continue to act as needed.
- CFO William Oplinger said sales of sheet for the car industry would increase sixfold to $1.3B-plus in 2018; Kleinfeld also hailed the company’s new patented screw-top beer bottle, as 84% lighter than a glass bottle and infinitely recyclable.
Apr. 8, 2014, 4:58 PM
- Alcoa (AA) +2.5% AH after Q1 earnings manage to top Wall Street's modest expectations; adjusted EPS of $0.09 topped estimates but fell short of $0.11 in the year-ago quarter on revenue of $5.45B, below last year's $5.83B.
- AA's engineered products and solutions unit, which makes fasteners, truck wheels and parts for jet engines, posted a 9% Y/Y increase in operating income to $189M due to higher volumes for aerospace and commercial transportation.
- The primary metals division, which makes raw aluminum, reported an operating loss of $15M vs. a $39M profit a year earlier.
- Sees 8%-9% growth in the global aerospace sector, up from its earlier 7%-8% target, on strong demand for both large commercial aircraft and regional jets, as well as the business jet market.
- Continues to project 7% global aluminum demand growth in 2014.
Apr. 8, 2014, 4:05 PM
Apr. 8, 2014, 12:10 AM
Apr. 7, 2014, 5:35 PM
Apr. 7, 2014, 8:42 AM
- Alcoa (AA) is upgraded to Hold from Sell with a $10 price target, up from $7.50, at Deutsche Bank, which cites its expectation of higher realized aluminum prices for the foreseeable future; however, the firm sees continued downside risk given the increasingly “black-box" nature of regional premia price support.
- A weekend WSJ report says Alcoa, which reports Q1 earnings tomorrow, may be turning around due to its commitment to using aluminum for cars as it invests $575M to expand new lines in Iowa and Tennessee, and aluminum producers have began to cut capacity to try to counteract a glut.
- The firm reiterates Buy ratings on Freeport McMoRan (FCX) and Cliffs Natural Resources (CLF) due to potential near-to-medium term catalysts - resumption of Indonesia copper exports for FCX and progress towards monetization of the Bloom Lake mine for CLF.
Apr. 2, 2014, 8:11 AM
- Alcoa (AA) -1.4% premarket after Nomura reiterates a Neutral rating and $7 price target on the stock, saying significant downside risk looms as LME aluminum values continue to free fall while GRP margins should be pressured in Europe owing to AA’s inability to pass on higher premiums downstream.
- At spot aluminum of $0.80/lb., the firm estimates FY 2014 free cash flow at negative $630M, or -3.6% FCF yield.
- While recent capacity curtailments in China are incrementally positive, Nomura still sees growing Chinese surplus over the next three years outweighing modest tightening outside of China, limiting the likelihood of a sustained market deficit.
Apr. 1, 2014, 11:41 AM
- BHP Billiton’s plans to consider a spinoff of its nickel, manganese and aluminum assets sets a good path for Alcoa (AA), Sterne Agee says.
- Alcoa should look to spin off its Engineered, Products & Solutions (downstream) segment to capture the peak valuations of the aerospace cycle, including a 0.35x debt-to-capital ratio, Sterne says; a spinoff would still enable the remaining mid/upstream units to "retain the secular automotive opportunity, cost curve improvements, and commodity upside, as well as a much-reduced debt burden."
- The firm’s sum-of-the-parts analysis values AA at $22/share, up from its current target price of $15.
Apr. 1, 2014, 8:58 AM
- Alcoa (AA) says it plans to spend $40M to expand its rolling mill in Itapissuma, Brazil, to capture the growing demand in Latin America for specialty aluminum foils for packaging.
- AA says demand for specialty packaging in Brazil is expected to rise 7% annually over the next three years.
- Commissioning of the facility is expected to start in 2016.
Mar. 28, 2014, 9:35 AM
- Alcoa (AA +1.1%) says it will cut 147K metric tons of capacity at two aluminum smelters in Brazil, as increased costs have made the plants uncompetitive.
- Alcoa had placed 460K metric tons of smelting capacity under review last year; once all announced curtailments and closures are complete, it will have ~800K metric tons, or 21%, of smelting capacity offline.
AA vs. ETF Alternatives
Alcoa Inc manufactures and engineers lightweight metals. It products include aluminum, titanium, and nickel, which are used in aircraft, automobiles, commercial transportation, packaging, oil and gas, defense and industrial applications, among others.
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