07 JANUARY 2014Seekingalpha.com
Alcoa 2013 Earnings Preview
Edited by : AL CIRCLE
3 min read
Alcoa (AA), the once-iconic aluminum producer, and now former Dow 30 component, is scheduled to report their calendar 4th quarter earnings after the bell on Thursday, January 9th, 2013.
Consensus analyst expectations for q4 13 are for $0.05 in earnings per share (EPS) on $5.426 billion in revenue for expected year-over-year declines of 17% and 8% respectively.
Since q3 13 was reported in early October, EPS has seen a slight downward revision from $0.06 to now $0.05 per share, while the consensus revenue estimate has fallen from $5.444 billion to $5.26 billion.
The price of aluminum remains stable at the low end of its 6 month range near $0.80 per pound, according to this chart from InvestmentMine.com. All the recent rule changes around aluminum and warehousing and what was uncovered in this NY Times articles in the summer and fall of 2013, still (in my opinion) has not had much of an influence on price. (To be frank, I never understood the whole warehousing issue. "They" said it inflated aluminum prices, but the charts of aluminum prices show otherwise. I don't get it.)
The Q3 13 results were actually pretty decent: AA produced upside EPS and revenue surprises as 80% of operating income came from the stronger downstream business. Even though aluminum pricing was weak in q3 13, the downstream segment managed to compensate for upstream weakness. In addition improved forex from "producer" country currencies like the Aussie dollar, helped the bottom line.
It is easy to paint a dire picture of the aluminum producer, given the market price of aluminum and the rather public humiliation of being dumped from the Dow Jones Industrial Average after 50 years (?), but the stock is trading close to a 52-week as this is being written and was up 10.5% in December 2013 and 30% in the 4th quarter of 2013 alone, after being in the red most of the year.
Far more could go right in 2014 and 2015 for Alcoa, (than could go wrong, that hasn't already) but this still remains a stock where global growth needs to be robust, global central banks need to be stepping on the monetary brakes with both feet and there is a real threat of commodity inflation, which has been the exact opposite "macro" environment that we have seen in the last 5 years.
Alcoa peaked near $50 per share in 2007 after earnings close to $3 per share. Granted we may never see those days again, but I still think the April '11 high of $18 is feasible, with global demand, and better aluminum pricing.
Consensus analyst expectations for q4 13 are for $0.05 in earnings per share (EPS) on $5.426 billion in revenue for expected year-over-year declines of 17% and 8% respectively.
Since q3 13 was reported in early October, EPS has seen a slight downward revision from $0.06 to now $0.05 per share, while the consensus revenue estimate has fallen from $5.444 billion to $5.26 billion.
The price of aluminum remains stable at the low end of its 6 month range near $0.80 per pound, according to this chart from InvestmentMine.com. All the recent rule changes around aluminum and warehousing and what was uncovered in this NY Times articles in the summer and fall of 2013, still (in my opinion) has not had much of an influence on price. (To be frank, I never understood the whole warehousing issue. "They" said it inflated aluminum prices, but the charts of aluminum prices show otherwise. I don't get it.)
The Q3 13 results were actually pretty decent: AA produced upside EPS and revenue surprises as 80% of operating income came from the stronger downstream business. Even though aluminum pricing was weak in q3 13, the downstream segment managed to compensate for upstream weakness. In addition improved forex from "producer" country currencies like the Aussie dollar, helped the bottom line.
It is easy to paint a dire picture of the aluminum producer, given the market price of aluminum and the rather public humiliation of being dumped from the Dow Jones Industrial Average after 50 years (?), but the stock is trading close to a 52-week as this is being written and was up 10.5% in December 2013 and 30% in the 4th quarter of 2013 alone, after being in the red most of the year.
Far more could go right in 2014 and 2015 for Alcoa, (than could go wrong, that hasn't already) but this still remains a stock where global growth needs to be robust, global central banks need to be stepping on the monetary brakes with both feet and there is a real threat of commodity inflation, which has been the exact opposite "macro" environment that we have seen in the last 5 years.
Alcoa peaked near $50 per share in 2007 after earnings close to $3 per share. Granted we may never see those days again, but I still think the April '11 high of $18 is feasible, with global demand, and better aluminum pricing.
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