Alcoa (AA) to Start Q2 Earnings; Strong Report Expected Amid Pricing Pressures
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Price: $51.85 +2.57%
Rating Summary:
20 Buy, 13 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
20 Buy, 13 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Alcoa (NYSE: AA) is set to kick off the second-quarter earnings season (unofficially!) on Monday.
The Street is looking for earnings of 34 cents per share on revenue of $6.32 billion. If the company hits this level of earnings, it would mark a 21.4 percent sequential growth, and nearly 79 percent better from the first-quarter last year.
Shares fell 10 percent in the quarter and are up 2.5 percent since.
Streetinsider data has 4 analysts with a Buy rating, 2 with at Neutral, and 2 with a Sell equivalent rating on the stock. The analyst price target average is $19.70, with a low of $15 and high of $22. Alcoa shares have traded in a range of $9.92 to $18.47 over the last 52-week.
Analyst Comments
Goldman Sachs recently reduced it's earnings estimate for Alcoa from 37 to 32 cents per share. Goldman cites "actual aluminum prices and cost creep expected for upstream." However, the firm still maintains Alcoa shares are trading at significantly depressed levels, "considering its earnings potential as the alumina-aluminum price delinking unravels and aerospace cycle accelerates. Recent commentary from participants at the AMM Aluminum Summit gave us more confidence that Alcoa should derive significant benefit from re-pricing of alumina to spot indices. Additionally, Alcoa’s recent moves on improved designs for aerospace as well as the third generation aluminum-lithium alloys shows how focused the company is on protecting/increasing the market share of aluminum/Alcoa in the aerospace sector."
Deutsche Bank sees earnings of 28 cents per share, noting the 4 cent positive effect from aluminum prices will be offset by stronger-than-expected cost and energy inflation. "The fact that 40% of Alcoa's electricity costs are LME-aluminum linked will come home to roost in 2Q11 given their ~3 month lag and this has been exacerbated by costs impacted by stronger currencies in Brazil, Canada, Australia and Europe." Further color from Deutsche on Alcoa: "Alcoa has signed a $1bn multi-year supply agreement with Airbus to supply aluminum products for aerospace industry; this underlines AA's strong technical expertise in the aerospace segment. The Ma'aden JV (Ma'aden 60%, Alcoa 40%) secured $1bn loan this past quarter that will be used for the 2d phase of $10bn JV which includes construction of a aluminum smelter and rolling mill."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
More notable earnings coming in the weeks ahead:
07/14/2011 - JPMorgan (NYSE: JPM)
07/15/2011 - Citigroup (NYSE: C)
07/19/2011 - Coca-Cola (NYSE: KO), Goldman Sachs (NYSE: GS), Yahoo! (Nasdaq: YHOO)
07/20/2011 - US Bancorp (NYSE: USB)
07/21/2011 - AT&T (NYSE: T)
07/22/2011 - General Electric (NYSE: GE)
07/25/2011 - Broadcom (Nasdaq: BRCM)
07/26/2011 - 3M (NYSE: MMM), US Steel (NYSE: X)
07/27/2011 - Visa (NYSE: V)
The Street is looking for earnings of 34 cents per share on revenue of $6.32 billion. If the company hits this level of earnings, it would mark a 21.4 percent sequential growth, and nearly 79 percent better from the first-quarter last year.
Shares fell 10 percent in the quarter and are up 2.5 percent since.
Streetinsider data has 4 analysts with a Buy rating, 2 with at Neutral, and 2 with a Sell equivalent rating on the stock. The analyst price target average is $19.70, with a low of $15 and high of $22. Alcoa shares have traded in a range of $9.92 to $18.47 over the last 52-week.
Analyst Comments
Goldman Sachs recently reduced it's earnings estimate for Alcoa from 37 to 32 cents per share. Goldman cites "actual aluminum prices and cost creep expected for upstream." However, the firm still maintains Alcoa shares are trading at significantly depressed levels, "considering its earnings potential as the alumina-aluminum price delinking unravels and aerospace cycle accelerates. Recent commentary from participants at the AMM Aluminum Summit gave us more confidence that Alcoa should derive significant benefit from re-pricing of alumina to spot indices. Additionally, Alcoa’s recent moves on improved designs for aerospace as well as the third generation aluminum-lithium alloys shows how focused the company is on protecting/increasing the market share of aluminum/Alcoa in the aerospace sector."
Deutsche Bank sees earnings of 28 cents per share, noting the 4 cent positive effect from aluminum prices will be offset by stronger-than-expected cost and energy inflation. "The fact that 40% of Alcoa's electricity costs are LME-aluminum linked will come home to roost in 2Q11 given their ~3 month lag and this has been exacerbated by costs impacted by stronger currencies in Brazil, Canada, Australia and Europe." Further color from Deutsche on Alcoa: "Alcoa has signed a $1bn multi-year supply agreement with Airbus to supply aluminum products for aerospace industry; this underlines AA's strong technical expertise in the aerospace segment. The Ma'aden JV (Ma'aden 60%, Alcoa 40%) secured $1bn loan this past quarter that will be used for the 2d phase of $10bn JV which includes construction of a aluminum smelter and rolling mill."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
More notable earnings coming in the weeks ahead:
07/14/2011 - JPMorgan (NYSE: JPM)
07/15/2011 - Citigroup (NYSE: C)
07/19/2011 - Coca-Cola (NYSE: KO), Goldman Sachs (NYSE: GS), Yahoo! (Nasdaq: YHOO)
07/20/2011 - US Bancorp (NYSE: USB)
07/21/2011 - AT&T (NYSE: T)
07/22/2011 - General Electric (NYSE: GE)
07/25/2011 - Broadcom (Nasdaq: BRCM)
07/26/2011 - 3M (NYSE: MMM), US Steel (NYSE: X)
07/27/2011 - Visa (NYSE: V)
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