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Alcoa (AA) Dips More Than Broader Markets: What You Should Know

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Alcoa (AA) closed at $48.92 in the latest trading session, marking a -1.85% move from the prior day. This move lagged the S&P 500's daily loss of 0.38%. Meanwhile, the Dow lost 0.5%, and the Nasdaq, a tech-heavy index, lost 0.46%.

Coming into today, shares of the bauxite, alumina and aluminum products company had lost 17.32% in the past month. In that same time, the Industrial Products sector lost 4.69%, while the S&P 500 lost 6.69%.

Wall Street will be looking for positivity from Alcoa as it approaches its next earnings report date. On that day, Alcoa is projected to report earnings of $3.66 per share, which would represent year-over-year growth of 145.64%. Meanwhile, our latest consensus estimate is calling for revenue of $3.8 billion, up 34.3% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $11.95 per share and revenue of $14.78 billion. These totals would mark changes of +74.96% and +21.59%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for Alcoa. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 4.55% lower within the past month. Alcoa is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Alcoa has a Forward P/E ratio of 4.17 right now. Its industry sports an average Forward P/E of 6.24, so we one might conclude that Alcoa is trading at a discount comparatively.

It is also worth noting that AA currently has a PEG ratio of 0.48. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Metal Products - Distribution industry currently had an average PEG ratio of 0.48 as of yesterday's close.

The Metal Products - Distribution industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 16, which puts it in the top 7% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow AA in the coming trading sessions, be sure to utilize Zacks.com.


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