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Alcoa's (AA) Q4 Earnings Trail Estimates, Revenues Top

Alcoa Corporation AA logged a net loss of $125 million or 68 cents per share for the fourth quarter of 2016. The results include one-time items mainly associated with the closure of Suralco alumina refinery and mines in Suriname and the impairment of Alcoa of Australia Limited’s interests in a Western Australia gas field.

Barring one-time items, adjusted earnings came in at 14 cents per share for the reported quarter, missing the Zacks Consensus Estimate of 22 cents.

Revenues for the quarter were $2,537 million, coming ahead of the Zacks Consensus Estimate of $2,211 million. Alcoa gained from higher alumina and aluminum prices and increased volumes in its rolled products business in the quarter.

This is the company’s first quarterly report as a standalone, publicly traded company. The separation of the former parent company Alcoa Inc. into two independent, publicly traded companies – Arconic Inc. ARNC and Alcoa Corporation – was completed and became effective on Nov 1, 2016. Alcoa Inc. changed its name to Arconic Inc. on Oct 31, 2016.

Alcoa Corp. Price, Consensus and EPS Surprise


Alcoa Corp. Price, Consensus and EPS Surprise | Alcoa Corp. Quote

Business Update

Alcoa remained focused on building its third-party bauxite business and streamlining its portfolio during the fourth quarter. The company clinched its first major bauxite export contract out of Western Australia during the quarter. It also announced the permanent closure of the Suralco refinery and bauxite mines in Suriname. Alcoa was also granted approval to export up to 2.5 million metric tons of bauxite annually for five years to third-party customers.


Alcoa ended the quarter with cash and cash equivalents of $853 million. Long-term debt was roughly $1.4 billion as of Dec 31, 2016.


Moving ahead, Alcoa sees relatively balanced global bauxite and alumina markets and a modest global aluminum surplus of 400,000 to 800,000 metric tons for 2017. The company expects global aluminum demand growth of 4% year over year in 2017.

Price Performance

Alcoa has outperformed the Zacks categorized Metal Products - Distributor industry over the past three months. The company’s shares have gained around 63% over this period, compared with roughly 24.5% decline recorded by the industry.

Zacks Rank & Key Picks

Alcoa is a Zacks Rank #3 (Hold).

Better-ranked companies in the basic materials space include BHP Billiton Limited BHP and Teck Resources Limited TECK, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BHP Billiton has an expected long-term growth of 5.6%.

Teck Resources has an expected long-term growth of 10.7%.

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BHP Billiton Limited (BHP): Free Stock Analysis Report
Alcoa Corp. (AA): Free Stock Analysis Report
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Arconic Inc. (ARNC): Free Stock Analysis Report
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