Alcoa Inc.to publish Q3 earnings preview on Oct.8

Alcoa, Inc. is set to "officially" kick start the third quarter earnings season by reporting its financials on Oct.8. The company will hold a conference call on the same day at 5:00 p.m. (Eastern Time) to discuss the results and business developments.

Alcoa is the world's leading producer of primary and fabricated aluminum, as well as the world's largest miner of bauxite and refiner of alumina. Alcoa employs approximately 61,000 people in 30 countries across the world.

Wall Street expects Alcoa to earn 6 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies an increase of 100 percent from last year's 3 cents a share.

In the past four quarters, Alcoa has managed to beat the street's view thrice at a rate between 16.5 percent and 37.5 percent. However, the consensus view has dropped by 4 cents in the past 90 days, indicating a bearish stance of the analysts. In the last 30 days, three analysts have raised their earnings target on Alcoa while two analysts have reduced it.

Quarterly sales are expected to fall 2.1 percent to $5.71 billion from $5.83 billion in the corresponding prior year's quarter. The company has reported low single digit revenue growth in the past four quarters.

Weak aluminum prices should dampen Alcoa's quarterly results as the market is facing an oversupply. Deutsche Bank has cut the price outlook for the metal by 12-13 percent to $0.82 and $0.88 per pound for 2014 and 2015, respectively, as prices have been low for the past two quarters, eating into the profitability of the primary metals business of Alcoa.

In June, the company announced the review of 460,000 metric tons of its smelting capacity for possible curtailment due to low metal prices and to maintain cost competitiveness. Alcoa, however, still expects 2013 global aluminum demand to grow 7 percent.

"While the oversupply impacts the headline LME price, Alcoa's Primary aluminum business could also experience a reduction in its spot premia from the current 12c/lb level (2.5x that in 2008) to a prior 5c/lb level as financial speculators exit," Beristain said.

Already, premia have softened 1-2c as the LME rolled out a proposal to accelerate warehouse load-outs with queues of over 100 days.

For the second quarter, Alcoa reported a net loss of $119 million or $0.11 per share, compared to a net loss of $2 million or $0.00 per share for the year-ago quarter. Excluding items, it reported a profit of 7 cents a share. Sales grew to $5.96 billion from $5.85 billion a year-ago.

Shares of Alcoa, which trade 18 times its forward earnings, have dropped 13 percent this year. They traded between $7.63 and $9.37 during the past 52-weeks.