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News Breaks
April 7, 2014
12:38 EDTAAEarnings Preview: Alcoa shares near 52-week high ahead of Q1 report
Alcoa (AA) is scheduled to report first quarter earnings after the close on Tuesday, April 8, with a conference call scheduled for 5:00 pm ET. Alcoa is a global manufacturer of aluminum products. EXPECTATIONS: Analysts are looking for EPS of 5c on revenue of $5.56B, according to First Call. The consensus range for EPS is 0c-8c on revenue of $5.39B-$5.7B. LAST QUARTER: Alcoa reported fourth quarter adjusted EPS of 4c against estimates for 6c on revenue of $5.6B against estimates for $5.38B. The company forecast 2014 global aluminum demand growth of 7%. CEO Klaus Kleinfeld said, "we put a number of legacy matters behind us, clearing a path for Alcoa’s continued transformation in 2014." On the company's Q4 earnings conference call, management targeted $850M of additional year-over-year productivity gains in 2014. This was expected to be achieved by overhead cost reductions, procurement savings, and process productivity. For 2014, the company said it expects to build value-add with growth capital of $500M, an investment in its Saudi JV of $125M, and management of sustaining capital of $750M. Generating positive free cash flow will continue to be the target for 2014, and the company expects to manage its capital structure to a debt to capital ratio in the range of 30%-35% by the end of 2014. The company's initial outlook for the 2014 Alumina supply-demand situation is that the market will be in surplus of just under 2M metric tons or roughly 2% of the global market. STREET RESEARCH: Street research has been mixed in the weeks leading up to Alcoa's Q1 earnings report. On January 21, JP Morgan upgraded Alcoa to Overweight from Neutral, citing the tightening aluminum markets and increasing regional aluminum premiums. The firm raised its price target for Alcoa to $15 from $9. On March 14, Sterne Agee initiated Alcoa with a Buy rating and $15 price target. Conversely, on March 6, Standpoint Research downgraded Alcoa to Hold from Buy. On April 2, Nomura said there was significant downside risk to Alcoa's 2014 earnings estimates given the fall in LME aluminum prices and GRP margin pressures in Europe. The firm lowered Alcoa's FY14 EPS view to 14c from 28c, and FY15 EPS view to 31c from $1.32. It reiterated its Neutral rating and $8 price target on the shares. PRICE ACTION: Despite the company's worse than expected Q4 profit, Alcoa shares have rallied approximately 18% over the past 90 days, touching a 52-week high of $13.18 in early April. Over the past twelve months, the stock is up over 51%. In early afternoon trading ahead of tomorrow's Q1 report, Alcoa shares are down just over 1%.
News For AA From The Last 14 Days
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July 26, 2015
15:35 EDTAAAlcoa looks 'far more promising' under CEO Kleinfeld, Barron's says
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July 23, 2015
09:06 EDTAAAlcoa announces realignment of downstream portfolio
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09:02 EDTAAAlcoa completes acquisition of RTI International
Alcoa (AA) announced that it has completed the acquisition of RTI International Metals (RTI). The merger, announced on March 9, became effective today. Under the terms of the merger agreement, each share of RTI common stock has been converted into the right to receive 2.8315 shares of Alcoa common stock, plus an amount of cash in lieu of fractional shares of Alcoa common stock. Alcoa expects RTI to contribute $1.2 billion in revenue in 2019, up from $794 million that RTI generated in 2014, with 65 percent of revenues supported by contracts over the next five years. RTI’s profitability is expected to reach 25 percent EBITDA margin in 2019. Contracts that underpin RTI’s growth include the recently announced contract with Airbus for finished titanium structural supply parts for the new A350-1000 aircraft program. Under the agreement, Alcoa will supply titanium parts for the fuselage, among other components. Alcoa expects global aerospace sales growth of 8 to 9 percent in 2015. Projections for 2016 and 2017 sales growth have nearly doubled to 8 and 13 percent, from 4 to 5 percent and 6 percent, respectively, showing the ongoing strength of the sector. Eighty percent of RTI’s revenues in 2014 were from the aerospace and defense industries. With RTI, Alcoa’s 2014 pro forma aerospace revenue increases by 13 percent to $5.6 billion. RTI is being integrated as a standalone business unit into Alcoa’s downstream Engineered Products and Solutions segment.

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