Alcoa Leads Off With a Strikeout

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

As has become tradition each earnings season, aluminum producer Alcoa (NYSE: AA  ) became the first blue-chip company to release earnings for the quarter late Tuesday. They weren't pretty, but no one expected them to be.

For the quarter, the Pittsburgh-based company posted a loss of $479 million, or $0.61 a share, compared to last year's earnings of $303 million, or $0.37 a share. The per-share number was $0.05 worse than expectations. Revenue fell to $4.15 billion, from $7.38 billion during the first quarter of 2008. The loss from continuing operations was $0.59 per share.

Alcoa is the world's third largest producer of aluminum, behind rival Rio Tinto (NYSE: RTP  ) . It divides its operations into to four categories: alumina, primary metals, flat-rolled products, and engineered products. Both primary metals and flat-rolled products suffered losses during the quarter, while alumina and engineered products managed to eke out gains.

In many respects, the aluminum industry has been caught smack in the middle of the economic cataclysm that's affecting virtually the entire world. Its products are used in a variety of applications, including automobiles, airplane parts, consumer goods, and construction components, all of which have been hammered by the upheaval in the economy.

Like so many industrial companies, Alcoa has undertaken a variety of steps to shore up its operations and shave its costs. In January, it lopped off 13% of its workforce. Beyond that, it continues to trim production and shutter plants, in addition to cutting its dividend.

But given the precipitous price slide that most commodities have taken of late, there's no doubt that other aluminum producers such as Century Aluminum (Nasdaq: CENX  ) and Kaiser Aluminum (Nasdaq: KALU  ) will suffer the same fate as Alcoa -- or possibly worse. Ditto such other disparate metals companies as Southern Copper (NYSE: PCU  ) and perhaps steel mini-mill operator Nucor (NYSE: NUE  ) , each of which will report later on.

But the most immediate question is how we treat Alcoa today. I'm inclined to be a slow, steady buyer. This is a high-quality metals producer whose ultimate value likely has declined far less than its share price -- which closed yesterday at $8.06, down from a 52-week high approaching $45.

Given an economic turnaround, I'm convinced Alcoa will be one of the first to exit the starting gate. That alone should make it worth your attention.

For related Foolishness:

Fool contributor David Lee Smith doesn’t own shares in any of the companies mentioned above. He does, however, welcome your questions or comments. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 871973, ~/Articles/ArticleHandler.aspx, 10/24/2016 4:40:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 4:00 PM
AA $26.86 Down -0.02 -0.07%
Alcoa CAPS Rating: ***
CENX $7.43 Up +0.22 +3.05%
Century Aluminum CAPS Rating: ***
KALU $71.57 Down -0.18 -0.25%
Kaiser Aluminum CAPS Rating: ****
NUE $47.68 Down -0.19 -0.40%
Nucor CAPS Rating: *****
PCU $31.38 Down +0.00 +0.00%
Southern Copper CAPS Rating: ****
RTP.DL $0.00 Down +0.00 +0.00%
Rio Tinto plc (ADR… CAPS Rating: ****