Please ensure Javascript is enabled for purposes of website accessibility

Why Alcoa Stock Just Popped

By Rich Smith - Apr 16, 2021 at 10:19AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

First-quarter earnings just crushed estimates, and the rest of 2021 looks strong as well.

What happened

Alcoa (AA -5.67%) stock raced out of the gate Friday, as shares of the metals giant jumped 5.6% through 10 a.m. EDT. The company reported a big earnings beat last night.

Expected by analysts to earn $0.46 per share pro forma on sales of $2.65 billion in its fiscal first quarter of 2021, Alcoa instead reported a $0.79 adjusted profit, and sales of $2.87 billion.  

Green arrow trending up over the numerals 2021

Image source: Getty Images.

So what

Alcoa boasted that Q1 2021 earnings set post-2018 records for both revenue and income. Pro forma profits tripled sequentially and reversed a year-earlier loss. Sales were up 20% both sequentially and year over year. Additionally, Alcoa was profitable for the quarter according to generally accepted accounting principles (GAAP) -- earning $0.93 per share.  

Now what

Both volumes shipped and price per ton improved for Alcoa last quarter, indicating strong demand for aluminum and leading Alcoa management to predict "a strong 2021 based on continued economic recovery and increased demand for aluminum in all end markets."

Specifically, Alcoa is projecting growing volumes of both bauxite and raw aluminum shipped this year, and "double digit" increases in shipments of "value-add products" (i.e., aluminum manufactured in "specific shapes and alloys such as billet, slab, foundry and rod.")

Alcoa didn't provide precise numbers for what it expects to do in terms of sales and profits this year, but for what it's worth, analysts are forecasting sales in excess of $10.4 billion (up 12% over last year) and profits of $2.58 per share (versus a loss in 2020).

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alcoa Corporation Stock Quote
Alcoa Corporation
$50.79 (-5.67%) $-3.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.