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Alcoa (AA) Gains But Lags Market: What You Should Know

Zacks Equity Research
Southside Bancshares (SBSI) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Alcoa (AA) closed at $29.65 in the latest trading session, marking a +0.2% move from the prior day. The stock lagged the S&P 500's daily gain of 0.86%. Meanwhile, the Dow lost 0.06%, and the Nasdaq, a tech-heavy index, added 1.37%.

Coming into today, shares of the bauxite, alumina and aluminum products company had gained 12.77% in the past month. In that same time, the Industrial Products sector gained 9.68%, while the S&P 500 gained 8.11%.

AA will be looking to display strength as it nears its next earnings release, which is expected to be April 17, 2019. The company is expected to report EPS of -$0.05, down 106.49% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.76 billion, down 10.53% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.02 per share and revenue of $11.89 billion. These totals would mark changes of -43.58% and -11.3%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for AA. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 35.87% lower. AA is holding a Zacks Rank of #5 (Strong Sell) right now.

In terms of valuation, AA is currently trading at a Forward P/E ratio of 14.63. For comparison, its industry has an average Forward P/E of 14.63, which means AA is trading at a no noticeable deviation to the group.

We can also see that AA currently has a PEG ratio of 3.63. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AA's industry had an average PEG ratio of 1.15 as of yesterday's close.

The Metal Products - Distribution industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 235, putting it in the bottom 9% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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