Alcoa Inc. ($AA) Stock | Aluminum Prices Hitting Bottom Line


Alcoa Inc. (NYSE: AA)



Alcoa Earnings

Alcoa Inc kicked off earnings season yesterday after the market closed with a slight adjusted earnings per share beat of 4 cents compared to analysts expectations of two cents. However, revenues were off by 18% compared to last year’s numbers, as aluminum prices are quite a bit lower. Analysts expected revenues at $5.29 billion but AA came up short with $5.25 billion in revenue, down from $6.38 billion during the same period last year. Currently analysts have an average price target of $11.36.

Chairman and CEO Klaus Kleinfeld Comments

“It’s been profitable despite of lower alumina. Alumina has actually decreased in the quarter by 24% and over the course of the whole year 43%. Alumina prices continue to go further down, even 1% further down in the quarter, and over the full have declined 28%. Alumina is profitable and primary metals have actually, in regards to the adjusted EBITDA per metric ton, improved. That’s a pretty good sign here. We are also projecting robust aluminum demand growth for this year of 6%, and we are believing that alumina and aluminum deficits are going to happen in this year.” (NASDAQ)


AA Technicals

AA Chart

AA shares initially spiked to highs of $8.40 with the earnings release but have since come back down to yesterday’s closing price of $8. Looking back over the daily chart you can see that shares have been on a steady down trend as commodity prices continue to slide. AA started 2015 at $$15.87 and as of yesterdays close at $8 they are down nearly 50%. There looks to be a good amount of support at the $8 level as shares have tested it three times now in the past few months. We’ll have to see how the market trades this earnings release but if we get a move to new lows we could see further selling pressure mount up. Resistance will be met at around the $8.50 and $9 levels.


Company Profile

Alcoa, Inc. engaged in lightweight metals engineering and manufacturing. Its products are used worldwide in aircraft, automobiles, commercial transportation, packaging, oil and gas, defense, and industrial applications. The company operates its business through four segments: Alumina, Primary Metals, Global Rolled Products and Engineered Products & Solutions. The Alumina segment consists of Alcoa’s upstream operations and consists of the Company’s worldwide refinery system, including the mining of bauxite, which is then refined into alumina. Alumina is mainly sold directly to internal and external smelter customers worldwide through agents, alumina traders, and distributors. The Primary Metals segment comprises of Alcoa’s upstream operations and consists of the Company’s worldwide smelter system. Primary Metals receives alumina, mostly from the Alumina segment, and produces primary aluminum used by Alcoa’s fabricating businesses, as well as sold to external customers, aluminum traders, and commodity markets. The Global Rolled Products segment is involved in the production and sale of aluminum plate, sheet and foil. It includes rigid container sheet, which is sold directly to customers in the packaging and consumer market. The segment also includes sheet and plate used in the transportation, building and construction and distribution markets. The Engineered Products and Solutions segment is involved in the production and sale of titanium, aluminum and super alloy investment castings, hard alloy extrusions, forgings and fasteners, aluminum wheels, integrated aluminum structural systems and architectural extrusions. These products serve the aerospace, automotive, building and construction, commercial transportation, power generation and defense markets. Alcoa was founded by Charles Martin Hall on October 1, 1888 and is headquartered in New York, NY. (MarketWatch)