The New Year is here, and it won't be long before earnings season starts ramping up. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Let's turn to Alcoa (AA +0.00%). The aluminum company and Dow Jones Industrials (^DJI 0.13%) member traditionally kicks off every earnings season with its report, which is due out on Tuesday. Let's take a look at what's been happening with the company over the past quarter.
Stats on Alcoa
|
Analyst EPS Estimate |
$0.06 |
|
Change from Year-Ago Actual EPS |
NM (loss of $0.03 last year) |
|
Revenue Estimate |
$5.61 billion |
|
Change from Year-Ago Revenue |
(6.3%) |
|
Earnings Beats in Past 4 Quarters |
3 |
Source: Yahoo! Finance.
Has Alcoa hit bottom?
After a tough past couple of years, Alcoa's stock has bottomed out in the past quarter, at least temporarily. With the shares having hit 52-week lows in November, Alcoa rebounded toward the end of the quarter and has posted a gain of about 2.5% over the past three months.
One reason Alcoa's fortunes are looking somewhat brighter is that the company hasn't shied away from aggressive moves to bolster its leadership position in the industry. Even as big players Rio Tinto (RIO 0.38%) and BHP Billiton (BHP 0.43%) seek to sell off or close aluminum projects because of low prices, Alcoa has been looking to grab up those assets. That's a somewhat risky gamble, but it could pay off with huge returns if the industry rebounds somewhat quickly, allowing Alcoa to make use of newly acquired assets quickly.
Moreover, Alcoa stands to benefit from efforts from governments to stimulate economic activity. Rival Chinalco (ACH +0.00%) has had to deal with the same headwinds as Alcoa, but both companies could recover if China's big $150 billion infrastructure spending package produces results.
Still, with changing trends just now taking shape, don't expect the fourth quarter's numbers to reflect the good things that Alcoa has started to see. Even though many investors will focus on backward-looking headline numbers for earnings per share and revenue numbers, the smarter move is to focus on discussion of the aluminum company's future plans. A promising outlook could boost the entire market, and if Alcoa's strategy keeps taking shape, now could be a good opportunity to pick up on a turnaround before it starts to pick up steam.
Click here to add Alcoa to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
