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Alcoa (AA) Gains As Market Dips: What You Should Know

Zacks Equity Research
Texas Capital (TCBI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

In the latest trading session, Alcoa (AA) closed at $35.15, marking a +1.24% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.76%. Meanwhile, the Dow lost 0.82%, and the Nasdaq, a tech-heavy index, lost 0.9%.

Coming into today, shares of the bauxite, alumina and aluminum products company had lost 4.06% in the past month. In that same time, the Industrial Products sector lost 2.86%, while the S&P 500 lost 1.41%.

Investors will be hoping for strength from AA as it approaches its next earnings release, which is expected to be January 16, 2019. In that report, analysts expect AA to post earnings of $0.64 per share. This would mark a year-over-year decline of 38.46%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.51 billion, up 10.64% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.72 per share and revenue of $13.51 billion. These totals would mark changes of +23.59% and +15.91%, respectively, from last year.

Any recent changes to analyst estimates for AA should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.65% lower. AA is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, AA currently has a Forward P/E ratio of 9.34. This represents a no noticeable deviation compared to its industry's average Forward P/E of 9.34.

Also, we should mention that AA has a PEG ratio of 1.05. 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. AA's industry had an average PEG ratio of 1.05 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 41, putting it in the top 16% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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