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Earnings roundup: Alcoa, J.B. Hunt, & PNC all beat estimates for Q3

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Yahoo Finance's Brian Sozzi and Julie Hyman break down the biggest earnings movers of the morning.

Video Transcript

- This is Yahoo Finance's Live. We are calling about seven minutes to the opening bell here this morning. We are looking at futures with an upward bias following the big rally that we saw in stocks yesterday. That was the biggest in about seven months fueled.

Yesterday, by jobless claims data and better than estimated bank earnings. This morning, we had that better than estimated retail sales report. And Goldman Sachs to help fuel a continuing rally.

Let's dig into some other movers though, some other companies out with earnings. I have been fascinated by the numbers from Alcoa this quarter. I have to say Brian Zorzi. The company has been doing well this year on the strength of demand for basically everything.

But aluminum has definitely been a part of that. And the company is going to pay a dividend. A $0.10 dividend to be paid on November 19 stockholders of record at the close of business on October 29th.

First time it has paid a dividend going back to 2016. And it's returning cash to shareholders with a share repurchase program of $500 million. Yes, you have the earnings up there too, which also beat estimates.

But it is interesting this cash return here. And what it sort of signifies for Alcoa.

- Yeah. Hello. We were talking to Constellation Brands CEO Bill Newlands yesterday about inflation. He's seeing-- listen, they sell a lot of beer in cans here. And this quarter from Alcoa certainly explains why a Constellation Brands, a Pepsi, a Coca-Cola when it reports next week. They're seeing inflation a lot of large parts of their business.

Now, very good set of news here from Alcoa to your point. Mean, the stock is up significantly this year. But I did like what CEO Roy Harvey, president and CEO said on the call last night. He continues to see positive GDP in industrial production across the world's economies. Interesting note there.

And then overall, he's looking for aluminum prices to increase about 10% versus 2020. So all in all, I mean, a good-- good series of headlines from Alcoa, good earnings call, and an interesting Nugget on the state of GDP, which maybe I shouldn't be so surprised about just given how the retail sales report came in today.

- Yeah. By the way, that 10% gain over 2020 would also put them back above pre-pandemic levels in terms of global demand for aluminum, which is also interesting. Something else like because I love this sort of nerdy stuff.

So a couple of things that go into aluminum are magnesium and silicone. And/or silicone, excuse me. And we have seen prices for both of those go higher because there are more supply bottlenecks.

So they actually got some questions about that on the call both about the concern about higher pricing to which the company said it is raising prices to more than make up for the increase in component costs. But then analysts also said, well, it's not just about paying more for them, it's will you even be able to get it in order to make the aluminum.

And they did seem relatively optimistic that they would be able to-- to get that. The CFO the executive, vise president, and chief financial officer William Oplinger. I think Bill Oplinger who goes by he said shortages are a concern. Our procurement team is actively working on trying to make sure that we have enough material to be able to supply our customers. But shortages are a concern.

So you know, it's just fascinating to me how broad the shortage issue is across the US economy.

- Julie, I mean, I have to be honest with you, just between us here, and I guess viewers globally, I didn't really know how aluminum was made. So thank you for telling me that. Definitely wasn't sure.

- There you go.

- I'll be honest, I never-- never thought about it. Never thought about.

- Bringing you the trivia. Here the important trivia though.

- Not science highlight.

- All right. Moving on. Speaking of shortages, and how stuff gets made, and how stuff gets transported. JB Hunt was out with its numbers this morning as well. You see their adjusted earnings per share coming in $0.10 above estimates.

Revenue also being beating estimates. This is an intermodal logistics company. So they basically manage how things get moved around North America. Not just the US, but North America. What stands out to you about these numbers?

- Stands out to me is how lame that quarter from FedEx a couple of weeks ago. It sure looks like coming off this JB Hunt quarter. Three or for business segments showing double digit revenue growth.

That is despite them seeing some volume declines in their business overall. I mean, this quarter really suggests that, at least from a JB Hunt perspective. Maybe some other logistics players. Maybe an XRPL logistics.

When they report in a few weeks, they have been able to successfully not only raise prices, Julie, but significantly raise prices to the point that they're able to overcome higher costs for-- for workers. As an ongoing problem in this industry, higher costs for fuel and-- and other types of inputs here.

So a very good quarter by JB Hunt. And as we talked about on Monday, JB Hunt, a key customer of Walmart. So it immediately has me thinking that Walmart's quarter may have gone pretty well.

- It also makes me think about our discussion yesterday about the Port of Los Angeles. And the idea that even if it's operating 24/7, you still need trucks in their, trains in there, what have you to move containers away from the port.

And into America and going to have to-- I haven't had a chance to dig into JB Hunt's call yet. But I do wonder if they had any kind of insight into that as we try to take those bigger takeaways.

- Do we get Brian Cheung on that? He's been Manning every other earnings call this week. Maybe we can get him on there. I hope he's still watching. Brian, get on that. Come back. I need you baby.

- Just quickly want to mention the numbers from PNC Financial. You know, we've been talking about all the big banks. I don't know if he was on this conference-- this earnings call.

- He might be. He might have one airpod here on JB Hunt, one airpod on PNC.

- That would be confusing. So anyway, PNC another one of those that came out and beat estimates here. Loans did fall by 1 and 1/2 quarter over quarter. So similar theme to what we've seen at the other banks that we are just not seeing the loan growth that some of these banks would like.

Efficiency ratio, 69% versus 59% year over year. The estimate was for 66%. So there is another example. You were talking about these banks cutting expenses. Efficiency ratio as Brian told us is one way to measure that. So it looks like that came in ahead of estimates.

Net interest margin though. A little bit lower year over year, which is interesting given the increase in what we have seen in rates. And the company's CEO Bill Gymshark saying in the statement average loans increased to the full quarter benefit of them acquiring BBVA remember. But period and loans decreased modestly-- moderately-- modestly excuse me because of Paycheck Protection Program loan forgiveness activity.

So you know, a lot of sort of crosscurrents it sounds like for PNC.

- Yeah. Go ahead, Julie. Go ahead.

- No, no. You go.

- I should say Wells Fargo hopped on the media call yesterday with the CFO. Really cutting a lot of expenses. Fascinating to watch them do that.

- Yeah, most definitely. All right. We're taking the opening bell here this morning. On what looks like the second day of rally.

- Oh, they're excited.

- At the company that's having an IPO today. As we get underway here this morning, you know, it looks like a little bit of-- oh, wow, they are very excited.

They've got a chant going. That's not something you hear too often. I think they must be chanting that lady's name. Our opening bell around the bell coverage is brought to you by PIMCO this morning and every morning.

As we take a look here getting underway, we are indeed seeing a continuation of yesterday's gains. So we'll have to look at the magnitude of the two day gain. If yesterday was the best single day gain going back seven months, we'll have to crunch the numbers and see what the two day gain is looking like as we head towards the end of this Friday and the end of this week.

And the momentum coming as we get two days in a row of positive economic reports. So don't know what that does to your stagflation narrative, Mr. Zorzi. But sorry. You're not your stagflation narrative. The stagflation narrative that is out there. But it's-- It's Murphy.