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Dura-Bright EVO surface-treated truck wheel. Source: Alcoa.

Alcoa (NYSE:AA) is scheduled to release its quarterly report on Tuesday, marking the official start of the first-quarter earnings season. Investors, though, have gotten an early start on a potential celebration, and while this quarter's results could still look ugly, Alcoa shareholders are looking forward to better times in the quarters and years ahead.

Alcoa's story has been a tough one, with the aluminum specialist being kicked out of the Dow Jones Industrials last year as a result of its long period of poor performance. Prices in the industry remain weak, but Alcoa has worked hard to find specialized applications for its materials, working with key customers Boeing (NYSE:BA) and Ford (NYSE:F) to come up with value-added uses for aluminum that can fetch premium prices. Will Alcoa's strategy prove successful in the long run? Let's take an early look at what's been happening with Alcoa over the past quarter and what we're likely to see in its report.

Stats on Alcoa

Analyst EPS Estimate

$0.05

Change From Year-Ago EPS

(56%)

Revenue Estimate

$5.56 billion

Change From Year-Ago Revenue

(4.7%)

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will Alcoa earnings start the season on the right foot?
In recent months, analysts have had mixed views on Alcoa earnings, cutting their full-year 2014 estimates by 10% but raising their 2015 projections by more than 13%. The stock, meanwhile, has taken the longer-term view, jumping 20% since early January.

Alcoa got off to a rocky start to the quarter, with its fourth-quarter results sparking further concern among shareholders. Revenue dropped 5% and earnings fell short of expectations by a third, sending the stock down more than 5% the day after the company made its after-hours announcement. Even though Alcoa said it expects aluminum demand to grow by 7% globally, it also identified surplus supply in the market, even as some new production capacity in the industry will open up this year.

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Newly designed F-150 with high aluminum content. Source: Ford.

But everything changed the following week, when Ford came out with a redesigned F-150 that includes a 97% aluminum body. With Alcoa among Ford's top suppliers for the F-150, having its aluminum products so clearly on display could inspire many other corporate customers to see the potential of lightweight aluminum materials for their goods. Interestingly, though, Alcoa sees the automotive industry as having slightly less growth potential this year than aerospace, where supplying Boeing and other aircraft makers could also have a positive impact on pricing in the long run.

The behavior of the broader aluminum market shows how important it is for Alcoa to go beyond simple commodity-metal manufacturing. Even though Alcoa has kept its average realized prices for aluminum production above its cash costs, it relies on earning a premium above London Metal Exchange prices for raw aluminum in order to stay profitable.

As a result, Alcoa has made operational moves designed to emphasize higher-margin production. The company said a couple weeks ago that it would shut down two smelters in Brazil, following earlier moves around the world. Yet Alcoa also boosted its investment in a plant in Hungary that makes aluminum truck wheels, which are lighter and help vehicle-fleet owners meet the need for better fuel efficiency.

In the Alcoa earnings report, watch to see whether the aluminum maker gives better guidance for 2014 based on the Ford F-150 deal. With such an important supply arrangement, Alcoa needs to make the most of the opportunity and make it clear that the value-added benefits of aluminum over other materials should lead other manufacturers to follow Ford and boost Alcoa's automotive business.

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Dan Caplinger owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.