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Alcoa (NYSE:AA) Share Prices Have Dropped 56% In The Last Three Years

Simply Wall St
·3 min read

It is a pleasure to report that the Alcoa Corporation (NYSE:AA) is up 100% in the last quarter. Meanwhile over the last three years the stock has dropped hard. Indeed, the share price is down a tragic 56% in the last three years. So it is really good to see an improvement. The rise has some hopeful, but turnarounds are often precarious.

View our latest analysis for Alcoa

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

We know that Alcoa has been profitable in the past. However, it made a loss in the last twelve months, suggesting profit may be an unreliable metric at this stage. Other metrics may better explain the share price move.

Arguably the revenue decline of 7.8% per year has people thinking Alcoa is shrinking. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
earnings-and-revenue-growth

Alcoa is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Alcoa will earn in the future (free analyst consensus estimates)

A Different Perspective

Alcoa shareholders have gained 28% over twelve months. This isn't far from the market return of 26%. Shareholders can take comfort that it's certainly better than the yearly loss of about 16% per year endured over the last three years. It could well be that the business is getting back on track. It's always interesting to track share price performance over the longer term. But to understand Alcoa better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Alcoa you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.