Alcoa (AA) Pops on Upbeat Earnings Report

Michael Teague |

Leading US aluminum producer Alcoa Inc. (AA) is watching shares chug upwards on Wednesday after the company surprised Wall Street by releasing an unexpectedly positive third-quarter earnings report ahead of the opening bell.

The $8.8 billion company’s quarterly income statements have come to be a bellwether for earnings season, particularly because the Alcoa’s performance is thought to be tied to its exposure to wide swathes of the global economy, and as such provides a unique and concise divining rod by which investors can get a sense of growth conditions on a large scale.

For Q3 2013, Alcoa raked in $5.8 billion in revenue for an adjusted net income of $120 million, or $0.11 per share, compared to the prior-year period during which the company lost $143 million or $0.13 per share. Consensus estimates had revenue at $5.632 billion, and net income $0.05 per share.

The better than expected performance was due in large part to greater revenues from the company’s Rolled and Engineered products segments. Primary metals, meanwhile, had dropped about one percent from the prior year, while the Aluminum segment flipped from last year’s $9 million loss to a gain of $67 million, as well as beating the second quarter’s $64 million figure.

The better sales numbers are at least partially explained by more business generated from an ostensibly resurgent automotive industry. However, the company is making operational moves that have also been the liking of investors, and these include an expansion of automotive sheet metal factories, and the opening up of an aluminum facility in the Kingdom of Saudi Arabia.

Alcoa also seems to be following through on cost-cutting plans, particularly as it has moved to make good on its promise to curtail at least 50 percent of its increasingly unprofitable smelting operations.

By midday trading, shares had advanced just shy of 4 percent to $8.24. Alcoa is down over 7 percent so far in 2013.

 

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Companies

Symbol Name Price Change % Volume
AA Alcoa Inc. 31.90 0.59 1.87 2,708,989
MAGG3 Magnesita Refratarios SA n/a n/a n/a 0

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