| Alcoa (AA) Buckles Up for Q1: Will its Earnings Beat Again? - Analyst Blog | |
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Alcoa AA is set to release its first-quarter 2015 results after the close on Apr 8. In the last quarter, the New York-based aluminum giant notched up a 26.92% positive earnings surprise on strength across aerospace and automotive markets, higher metals pricing and productivity gains. Alcoa has logged positive surprises in the trailing four quarters, with an average beat of 48.25%. While many no longer see Alcoa as a major earnings season bellwether following its exclusion from the Dow Jones Industrial Average in 2013, there is no denying that its results still matter as it provides a spotlight on demand trends for aluminum across a wide gamut of industries, which is closely linked to levels of economic activity.
Investors will look particularly for the company’s commentary on global aluminum demand trends and expectations for key end-use markets, especially aerospace and automotive. Let’s see how things are shaping up for this announcement. Factors to Watch For Strong demand for aluminum across aerospace and automotive markets should continue to drive Alcoa’s results in the March quarter. Aggressive cost-cutting and productivity improvement actions should also support its earnings in the quarter.
Alcoa is witnessing healthy airline fundamentals and expects the aerospace market to grow 9%-10% in 2015 on the back of strong demand for large commercial aircraft, regional jets and jet engines.
Alcoa is increasingly looking for expansion opportunities beyond its legacy primary aluminum business and diversify into other materials such as those (nickel and titanium-based) used to make aircraft parts.
The $2.85 billion acquisition of U.K.-based leading jet engine components maker – Firth Rixson – has allowed Alcoa to penetrate into a highly specialized segment of jet engine forgings and has further strengthened its robust aerospace portfolio. Moreover, the takeover of Germany-based titanium and aluminum structural castings supplier – Tital – reinforces Alcoa’s position to leverage strong growth in the commercial aerospace sector and capture rising demand for advanced jet engine components made of titanium. Alcoa has also agreed to buy titanium and specialty metal products supplier – RTI International Metals, Inc. RTI – in a stock-for-stock deal worth $1.5 billion. The buyout is expected to broaden Alcoa’s titanium offerings and add advanced technologies and materials to its portfolio.
Alcoa is also ramping up production to address healthy automotive demand. Strong auto demand for sheet products is expected to favorably impact the company’s global rolled products business in the March quarter.
Moreover, Alcoa remains on track to move down the cost curve and is actively repositioning its portfolio, including closure of high-cost smelters. The company, in March, said that it will review 500,000 metric tons of smelting capacity over the next 12 months for probable curtailment or sale, which would impact 14% of its global smelting capacity.
However, softness across building and construction and commercial transportation markets is expected to persist in Europe in the first quarter. The packaging market in North America is also expected to remain weak. While improved pricing aided Alcoa’s results in the fourth quarter, it is still faced with a volatile aluminum pricing environment given the oversupply of the metal in the market. The company is also expected to witness currency headwinds and pricing pressure in the packaging and European industrial markets. Its primary metals business is also expected to be impacted, in the first quarter, by reduced production due to the sale of Mt. Holly smelter, lower energy sales in Brazil and higher costs.
Earnings Whispers Our proven model shows that Alcoa has the right combination of two key ingredients to beat earnings. Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction) for Alcoa is +8.00% - the difference between the Most Accurate estimate of 27 cents and the Zacks Consensus Estimate of 25 cents. This indicates a likely positive earnings surprise. Zacks Rank #3 (Hold): Alcoa’s Zacks Rank #3 increases the predictive power of its ESP. Note that stocks with Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement. Stocks That Warrant a Look Here are some other mining companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter: Golden Star Resources, Ltd. GSS has earnings ESP of +100% and carries a Zacks Rank #3 (Hold).
Coeur Mining, Inc. CDE has earnings ESP of +33.33% and carries a Zacks Rank #3 (Hold). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ALCOA INC (AA): Free Stock Analysis Report RTI INTL METALS (RTI): Free Stock Analysis Report COEUR MINING (CDE): Free Stock Analysis Report GOLDEN STAR RES (GSS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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VanEck Vectors Global Alternative Energy ETF
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PRODUCER |
CODE : CDE |
ISIN : US1921085049 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Coeur Mining is a silver and gold producing company based in United states of america. Coeur Mining produces silver, gold, copper, lead and zinc in Argentina, in Australia, in Bolivia, in Mexico and in USA, develops gold and silver in Argentina and in Bolivia, and holds various exploration projects in Mexico. Its main assets in production are ROCHESTER MINE - NEVADA PACKARD in USA, ENDEAVOR and BROKEN HILL in Australia, PALMAREJO in Mexico, MARTHA MINE in Argentina and SAN BARTOLOME in Bolivia, its main assets in development are ROCHESTER and KENSINGTON in Bolivia and JOAQUIN in Argentina and its main exploration properties are KENSINGTON/JUALIN in Argentina, LAKE VICTORIA GOLD BELT in Tanzania and EL REALITO, GUADALUPE and LA PATRIA in Mexico. Coeur Mining is listed in Canada, in Germany and in United States of America. Its market capitalisation is 303.6 millions as of today (€ 277.4 millions). Its stock quote reached its highest recent level on November 21, 1997 at 99.38, and its lowest recent point on January 22, 2016 at 1.62. Coeur Mining has 47 442 200 shares outstanding. |