Mar. 11, 2014, 3:49 PM
- Alcoa (AA +1.7%) has enjoyed a 15% run YTD, and Morgan Stanley’s Paretosh Misra thinks shares look expensive at 34x 2014 earnings forecasts vs. the historical one-year forward P/E of 14x, but the firm sees three reasons Alcoa shares could hold up nicely.
- Stanley thinks Q1 consensus looks too low; based on quarter-to-date average FX, alumina and aluminum prices, the firm sees Q1 EPS at ~$0.10 vs. current consensus of $0.04.
- The auto body sheet story has gained traction, the firm says, sensing investors may overlook weakness in near-term earnings given the focus on 2015-20.
- Alumina prices are $15/ton below the YTD peak level, but the firm cites some expectation that Indonesia may not restart bauxite export this year, which could tighten the market.
- Still, Morgan’s base case for AA stock is $11, 11% lower than today’s price.
Mar. 10, 2014, 8:08 AM
- Mining shares, highly sensitive to Chinese demand, are weak in premarket trade after Chinese exports last month slumped 18% from a year ago, in contrast to the 5% increase that was expected by economists.
- Although the sharp drop raised concerns over Asia's largest economy, distortions due to the long Lunar New Year holidays could have contributed to the surprise fall.
- CLF -2.1%, BHP -1.9%, RIO -1.9%, FCX -1.3%, AA -1.3% premarket.
Feb. 25, 2014, 12:57 PM
- Alcoa (AA -0.9%) says it reached a deal to renew its existing power supply agreements in Quebec, but no longer plans to build a new potline to replace the two it closed at its Baie-Comeau facility last year.
- AA now plans to invest $250M at its Becancour, Deschambault and Baie-Comeau facilities in Quebec over the next five years, and shift some of Baie-Comeau's production to make more of the kinds of aluminum used by automakers.
- AA had warned that if Hydro-Québec went ahead with a planned rate hike, the three smelters would no longer be competitive.
Feb. 18, 2014, 7:21 PM
- GM is accelerating efforts to field a largely aluminum-bodied next-generation pickup truck by late 2018, recently locking in supply contracts with Alcoa (AA) and Novelis which are now working to increase their aluminum sheet production to supply the GM pickup, WSJ reports.
- The push to develop an aluminum intensive large pickup marks an apparent change of direction for GM; before Ford (F) unveiled its 2015 F-150 with a body made almost entirely of aluminum, GM execs had questioned whether such a vehicle could be cost competitive or appealing to U.S. customers.
- GM is said to believe it can offset Ford's head start by using more advanced welding techniques to produce a lighter, stronger and easier to assemble truck.
Feb. 18, 2014, 7:42 AM
- Alcoa (AA) says it will close an aluminum smelter and two mills in Australia by the end of the year because they "are no longer competitive and are not financially sustainable today or into the future."
- Alcoa has been idling and closing smelters to reduce capacity, as it confronts stubbornly low prices for aluminum due to global overcapacity; when these latest moves are completed, Alcoa will have cut its smelting capacity by 17%.
- The company expects to take restructuring charges of $0.22-$0.25/share, with 60% in Q1.
Feb. 11, 2014, 9:06 AM
- Believing several automotive platforms will move toward partial or full aluminum exposed body in the coming years - the Ford-150 is merely "the tip of the iceberg" - Goldman Sachs upgrades Constellium (CSTM) to Conviction Buy from Buy with a $35 price target from $27 and raises Alcoa's (AA) target to $15 from $12.
- The firm sees the gradual conversion of automotive exposed body to aluminum as a "game changer for downstream aluminum use, with a growth rate higher than any other end market for specialty metals for the rest of this decade."
- CSTM +2.3%, AA +1.4% premarket.
Jan. 21, 2014, 10:35 AM
- Alcoa (AA +5.2%) continues its unlikely march higher, as J.P. Morgan predicts tightening aluminum markets and higher prices will boost earnings.
- "Given the pace and amount at which premiums have recently increased, it is clearly difficult to forecast for how long they will remain near current levels which we believe provide a significant amount of earnings support to [Alcoa]’s primary aluminum smelting operations," the firm writes.
- The firm upgrades AA shares to Overweight from Neutral with a $15 price target, up from $9, and raises Century Aluminum (CENX +5.3%) to Overweight from Underweight with a $13 target, up from $6.
- Also: AWC +5.5%, KALU +0.5%, ACH +0.2%, NOR +4.5%.
Jan. 18, 2014, 8:25 AM
- Alcoa (AA) a high flier? So it seems: Just one week after a dismal Q4 earnings report dragged AA to the bottom of the S&P 500, investors decided it wasn't so bad and have sent shares climbing more than 12%.
- Shares have jumped nearly 50% since hitting a low close of $7.70 on Aug. 30 and have even gained 35% since they were yanked from the Dow on Sept. 20.
- 24/7's Charley Blaine cites three main reasons: AA is cutting capacity in its primary smelting business where it is no longer competitive; the auto industry is moving to aluminum in a big way; and the booming airline industry is craving AA's light but strong aluminum alloys.
- Even Jim Cramer is now on board, saying that an improving global economy means that when inventories are finally worked off and new, lower-cost facilities are in place, "the amount of money that will be made off of a slight increase in sales could be shocking."
Jan. 17, 2014, 1:55 PM
Jan. 15, 2014, 6:24 PM
- Alcoa (AA) says it will permanently close the remaining two potlines at its Massena East smelter in New York during Q1, reducing the company's smelting capacity by 84K metric tons, but that the Massena West facility will continue to operate.
- AA expects Q1 restructuring-related charges associated with the closure of $60M-$70M, or $0.06/share, of which ~40% is non-cash.
- The latest closure brings the total of the company's announced closures or curtailments to 361K metric tons of the 460K metric tons placed under review in May of last year.
- Shares -0.3% AH.
Jan. 15, 2014, 10:56 AM
- Greenland hopes to begin formal negotiations with Alcoa (AA +1.7%) on building a smelter capable of producing 340K metric tons/year of aluminum, the country’s finance minister says.
- Alcoa has been closing high-cost smelters and refocusing investment in divisions that roll and form aluminum into high-tech components used in cars and commercial aircraft.
- “The Greenland government has interest in making the Alcoa project successful, a pioneering project for Greenland,” the finance minister says.
Jan. 10, 2014, 3:27 PM
- Alcoa (AA -5.1%) continues to top S&P losers after its dismal Q4 earnings report, but at least no analyst downgrades have come in.
- There's no downgrading from a Sell rating, which Deutsche Bank reiterates based on a weak 2014 cash flow and credit rating outlook (Briefing.com).
- Nomura reiterates its Neutral rating, noting after-tax operating income growth rates are compressing with Q1 Y/Y growth targeted at ~6% compared with the Q2-Q4 2013 average of 21%;the firm lowers its 2014 adjusted EPS outlook to $0.28 from $0.40.
Jan. 10, 2014, 10:39 AM
- Alcoa (AA -6.3%) is sharply weaker in early trading after missing Q4 earnings expectations, lackluster Q1 guidance and the prospect of continued weak aluminum prices; the big writedown of smelting capacity underscores the challenges Alcoa faces with the older and higher cost parts of its smelting system.
- Shares had jumped more than 30% in the three months prior to the report, possibly rallying too far too fast and setting up a downturn.
- However, CEO Klaus Kleinfeld was ebullient last night on CNBC, noting that both Alcoa's commodity and value-add businesses continue to grow, the company has been aggressive in cutting costs, and the overseas bribery scandal is finally behind it.
- Kleinfeld says the aerospace segment is performing well, autos are looking good, and signs point to a pickup in commercial construction; China is slowing but its growth rate remains very healthy.
Jan. 10, 2014, 9:13 AM| 8 Comments
Jan. 9, 2014, 4:44 PM
- Alcoa (AA) -4.2% AH as adjusted Q4 earnings fell 5% Y/Y and weren't as strong as analysts expected, though revenue exceeded expectations.
- AA lost an unadjusted $2.34B in the quarter, including a $1.72B impairment charge tied to the temporary shutdown of two smelter potlines at a joint venture in Saudi Arabia.
- Revenue fell 5.3% Y/Y to $5.59B, as shipments of aluminum products fell nearly 3%.
- AA projects global demand for aluminum to rise 7% in 2014, same as last year; the company sees this year's growth coming from the aerospace, automotive and building and construction markets, more than offsetting a decline in the industrial gas turbine market because of lower orders.
Jan. 9, 2014, 4:08 PM
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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