Aside from some modest improvements in the aluminum industry, Street expectations continue to be low. However, if Alcoa’s (AA) Q4 performance was any indication, the aluminum giant is proving that despite being placed in the leadoff spot for earnings season, the company can also hit for power. Despite Headwinds, Aluminum Is Still Shining After a very difficult 2012, Street nerves calmed after Alcoa handily beat revenue estimates while posting a Q4 profit. The company reported net income of $242 million, or 21 cents per share, compared with a net loss of $191 million, or 18 cents per share in the year-ago period. It’s also worth noting that Alcoa’s quarterly results were helped by the sale of the Tapoco Hydroelectric Project facility, which generated a gain of $161 million after taxes. When excluding this gain and other items, net income arrived at $64 million, or 6 cents per share -- in line with analysts' expectations Revenue arrived at $5.89 billion – enough to beat Street estimates. That sales declined 2% year-over-year was a concern, however. But this was due to a decline in the average realized price of aluminum. On the other hand, that revenues advanced 1% sequentially was encouraging, helped by a 5% price improvement during the quarter. It was an impressive quarter overall, which culminated into a solid year despite industry headwinds. For the full fiscal year, the company earned net income of $191 million, or 18 cents per share. Meanwhile, management was able to meet profitability and capital sustainability goals for the fourth year in a row. In the process, the company was able to trim Q4 costs by 12% due in part to fewer restructuring expenses. For the performance, Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer offered this: Alcoa hit record profitability in our mid and downstream businesses, and continued to drive efficiency in our upstream businesses in the fourth quarter, all while cutting debt and maintaining our cash position. We overcame volatile metal prices and global economic instability to deliver on our targets for the fourth year in a row. We enter 2013 in a strong position to maximize profitable growth. Moving Forward Alcoa expects global aluminum consumption to grow 7% in 2013, which is up slightly from 6% in 2012. The company maintained that global aluminum demand will double between 2010 and 2020. Alcoa is also forecasting a slight dip in the aerospace sector to 9% where Boeing (BA) is expected to migrate its fleet of jets to aluminum. For Boeing, there’s also a cost and maintenance factor to consider. According to Tony Morales, Alcoa’s marketing directors for aerospace aluminum, an “aluminum-intensive” narrow-body jet made of new alloys would be up to 10% lighter than a “composite-intensive” plane and would cost 30% less to build and repair. Likewise, the Alcoa projected a 4% and 7% growth in automotive and commercial transportation industry. A company such as Ford (NYSE:F) might be Alcoa’s next growth opportunity. Ford has been looking for a competitive edge and can certainly benefit by switching to aluminum. Too, the lighter metal will help Ford meet tougher federal fuel-economy targets. Bottom Line Alcoa proved why the company deserves its royalty status on the stock market. Management has been doing a phenomenal job amid significant market turmoil, including reducing the company’s net debt position to $1.9 billion -- its lowest level in 7 years. On a fundamental basis, the stock remains undervalued by at least 40% -- $12 to $15 per share continues to be a realistic target, which assumes an 8 times forward multiple on 2013 EBITDA, which is .5 lower than the company’s historical average.