Finally.
At long last, Alcoa
Revenue growth in the first quarter rose by more than 16% with the aid of larger shipment volumes and higher realized prices. The real magic of the moment, though, was on the margin side. Gross profit jumped more than 38% as the gross margin rose by nearly 4 full percentage points. Reported income from continuing operations more than doubled, as did net income.
Segment performance was a little spotty -- primary metals, alumina, and engineered solutions all showed robust growth; the flat-rolled, extruded, and packaging/consumer areas, not so much. Nevertheless, the basic market conditions are still looking pretty good -- demand seems to be outstripping available capacity as aerospace companies such as Boeing
The fly in the ointment is whether this upswing is sustainable. While it's true that Alcoa can't exercise a great deal of control over all of its expenses (particularly for inputs like caustic soda), it's also true that the perception is that management hasn't made the most of this cyclical opportunity up until now. And when you look at other large metal companies, including Nucor
If costs are truly back under control, Alcoa should be able to rake in some cash for the next few years, since it will take a fair bit of time for production to catch up to demand. Of course, that presumes that the Asian economic expansion continues undiminished. I can see the attraction of considering these shares, as well as those of other aluminum companies, but I'd suggest a little caution. At least take the time to make sure you find the best-run aluminum company you can. I'm not sure whether it's Alcoa.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).