NEW YORK (AP) -- Low prices for aluminum are weighing heavily on Alcoa Inc. The company is expected to report a slim profit and lower revenue when it reports third-quarter results after the market closes Tuesday.
Alcoa lost a bit of luster last month, when it was dropped from the Dow Jones industrial average, ending the company's distinction as the first Dow member to report earnings each quarter. Still, its results will be watched for signs about global manufacturers' demand for the lightweight metal in a stubbornly slow-growing economy.
WHAT TO WATCH FOR: Any commentary on demand and price direction for aluminum.
Deutsche Bank downgraded Alcoa this week to "Sell" from "Neutral" and lowered its target price for the shares to $5.50, which would suggest a decline of nearly one-third over the next year.
Analyst Jorge Beristain cited "a deteriorating outlook" for Alcoa's primary aluminum business, and said that the company should consider spinning off that segment to eliminate a drag on the stock.
Weak prices have already caused Alcoa to idle plants that represent 12.5 percent of its smelting capacity. If Deutsche Bank's outlook for aluminum is correct, Beristain thinks the company could be forced to idle another 9 percent of capacity.
Alcoa has predicted that aluminum demand will grow 7 percent this year over 2012 thanks in part to orders from aircraft manufacturers. Analysts will be looking for any update to that forecast.
WHY IT MATTERS: Aluminum finds its way into many products that are all around us, from soda cans to automobiles and airplanes. That makes Alcoa something of an economic bellwether.
However, Alcoa is no longer among the 30 stocks in the Dow Jones industrial average. Along with Bank of America and Hewlett-Packard, it was dumped last month in favor of Nike, Visa and Goldman Sachs. Operators of the index cited the falling stock prices of the companies being removed, along with their desire to diversify the index with new companies.
Alcoa shares have fallen 8 percent this year and closed Friday at $7.96, up 10 cents for the day.
WHAT'S EXPECTED: Analysts predict that Alcoa will report bottom-line earnings of 6 cents per share, according to a survey by FactSet. Analysts expect revenue of $5.67 billion.
LAST YEAR'S QUARTER: Alcoa posted a loss of $143 million, or 13 cents per share, a year ago. Excluding items, it would have earned 3 cents per share. Revenue was $5.83 billion.