Earnings Preview: Alcoa To Kick Off 2nd Quarter Earnings Season
Wed, Jul 1, 3:40 PM ET, by EarningsPreviews.com
Alcoa (AA) is scheduled to report their second quarter 2009 results after the market closes on Wednesday, July 8. Based on our analysis, we at EarningsPreviews.com are expecting AA to report better than expected results that exceed Wall Street’s consensus expectations.
Analyst Expectations
We are forecasting revenues of $3.92 billion and EPS of ($.29). This would represent a 49% decline in revenues from last year’s $7.62 billion in the same period. The current analyst consensus estimates calls for revenues of $3.94 billion and EPS of ($.34).
Alcoa, as the world’s largest aluminum producer, tends to move inline with aluminum prices. While aluminum prices remain down approximately 50% from year-ago levels, prices have been increasing from off the lows we saw in the first quarter. In fact, aluminum prices averaged 7-8% higher in the second quarter than they did in the first quarter.
While stabilizing aluminum prices are clearly a positive for Alcoa, the headline numbers are still going to be negative. However, after disappointing Wall Street the last three quarters, we are now expecting Alcoa to post a second quarter loss that will be slightly better than the current consensus estimates.
Share Performance
Since the beginning of the year, Alcoa’s shares are down over 8%. In 2008, AA’s shares fell 69% and badly underperformed the 34% decline in the Dow Jones industrial average.
Valuation
Shares are now trading at 34x consensus fiscal 2010 EPS estimates. This is above the relative valuations of their peer group. Alcoa’s shares have doubled since hitting a new 52-week low in March. With green shoots of an economic recovery beginning to appear and with aluminum prices rising again, our investment thesis for Alcoa is becoming more positive.
SDI Glossary: "Analyst" Definition
SDI Glossary: "price" Definition
SDI Glossary: "Earnings" Definition
SDI Glossary: "EPS" Definition
This Article's Word Cloud:
Alcoa
Analyst
EarningsPreviews
However
Share
Street
This
Wall
Wednesday
While
With
after
aluminum
analysis
beginning
better
billion
clearly
consensus
current
decline
disappointing
doubled
down
economic
estimates
expecting
first
fiscal
from
have
headline
last
market
negative
positive
prices
quarter
report
represent
results
revenues
second
shares
than
that
their
with
would
year
More articles: 1 2 3 next »
| 
RSS