Please ensure Javascript is enabled for purposes of website accessibility

Will Alcoa Get Earnings Season Off on the Right Foot?

By Dan Caplinger - Apr 5, 2013 at 12:33PM

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

The aluminum maker traditionally starts off the season.

Spring is finally here, and a new earnings season is right around the corner. Next Monday Alcoa (AA) will get us started by releasing its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings 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 decision.

Alcoa has the smallest market cap of any member of the Dow Jones Industrials (^DJI 1.64%), but it has the honor of being the first Dow component to report its earnings every quarter. 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 quarterly report on Monday.

Stats on Alcoa

Analyst EPS Estimate

$0.10

Change From Year-Ago EPS

0%

Revenue Estimate

$5.93 billion

Change From Year-Ago Revenue

(1.2%)

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will Alcoa finally start to rebound?
Analysts aren't too optimistic about Alcoa's earnings prospects this quarter: They've cut their estimates substantially over the past few months, reducing their consensus for the just-ended quarter by $0.03 per share and their full-year 2013 call on EPS by $0.09. The shares have also continued their slow decline, falling by 5% since the beginning of 2013.

In an overall positive environment for the Dow, Alcoa has lagged behind during the past quarter. Given major concerns about the health of the global economy, signs of strength in the U.S. haven't been enough to pull Alcoa out of its long-term funk.

AA Chart

Alcoa data by YCharts.

But the aluminum giant has hope that conditions will improve eventually because of the strength of some of the sectors that represent its greatest sources of demand. Last quarter CEO Klaus Kleinfeld identified three key industries as potential drivers of growth for Alcoa: automobiles, aircraft, and heavy trucks and trailers. Kleinfeld sees aerospace climbing 9% to 10% in 2013, compared to a 2% to 7% rate for heavy trucks and trailers and a 1% to 4% range for autos globally.

Given enough time, those hopes may pan out. Boeing (BA 1.26%) has been using more aluminum in its jets in order to decrease weight and increase fuel efficiency. Automaker Ford (F 2.08%) has concentrated some of its biggest high-growth bets on China, and with Alcoa seeing the country as the primary contributor to its growth, Ford's efforts there will be important to Alcoa's success.

In Alcoa's quarterly report, watch closely for the company's CEO to give his views not only on Alcoa but on the state of the global economy. What he says could set the tone for the entire earnings season.

Click here to add Alcoa to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

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

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,774.68 (1.64%) $512.78
Alcoa Inc. Stock Quote
Alcoa Inc.
AA
The Boeing Company Stock Quote
The Boeing Company
BA
$122.22 (1.26%) $1.52
Ford Motor Company Stock Quote
Ford Motor Company
F
$12.76 (2.08%) $0.26

*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 service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

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.