"AAA Automobile Repair" may take first place in the phone book, but Alcoa's
What analysts say:
- Buy, sell, or waffle? Sixteen analysts gather 'round the smelter to cover Alcoa. Nine say to buy it, half a dozen hold, and one would sell the stock today.
- Revenue. On average, analysts expect to see $4.95 billion in Q3 sales, 7% greater than last year.
- Earnings. And with greater sales come greater advantages of scale. If all goes well, earnings could jump 50% to $0.06 for the quarter.
What management says:
Metals investors got a case of the tremors last month, when analysts large and small, from little Longbow Research to giant Goldman Sachs, began turning negative on the sector. First U.S. Steel
But what about aluminum?
When last we heard from management, this business was going swimmingly. Q2 sales had climbed a respectable 6%, profits were rolling in, and the company had even produced a bit of free cash flow ($87 million.) Even better, management told us to expect double-digit growth in end-market aluminum demand.
What management does:
But how has the company really been performing? See for yourself:
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
By and large, Alcoa's been doing a nice job of getting its profits back in the black. The gross margin is growing nicely, operating profits seem achievable again, and the company even booked a tiny net profit profit last quarter. Still, so long as Alcoa struggles under the weight of its massive $9.8 billion debt load, it's bound to find its business hobbled. (For comparison, archrival Rio Tinto
During this quarter, Alcoa used a note offering to fund the retirement of 2012-2013 notes paying between 5.3% and 6% interest, essentially exchanging current debt for debt maturing at a later date with a lower interest payment. Every little bit of savings helps, but here's hoping we see more progress on Thursday.
Fool contributor Rich Smith does not own shares of any company named above. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.