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TheStreet Open House
Alcoa Inc
AA : NYSE : Basic Materials
$16.06 0.37 | 2.38%
Today's Range: 15.83 - 16.12
Avg. Daily Volume: 19,120,600
10/21/14 - 10:01 AM ET

Financial Analysis


ALCOA INC's gross profit margin for the third quarter of its fiscal year 2014 has significantly increased when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. ALCOA INC has average liquidity. Currently, the Quick Ratio is 1.06 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 3.55% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future.

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Income Statement Q3 FY14 Q3 FY13
Net Sales ($mil)6239.05765.0
EBITDA ($mil)1052.0675.0
EBIT ($mil)705.0327.0
Net Income ($mil)149.024.0


Balance Sheet Q3 FY14 Q3 FY13
Cash & Equiv. ($mil)3272.01076.0
Total Assets ($mil)37120.038229.0
Total Debt ($mil)8988.08344.0
Equity ($mil)12399.012856.0


Profitability Q3 FY14 Q3 FY13
Gross Profit Margin21.416.77
EBITDA Margin16.8611.7
Operating Margin11.35.67
Sales Turnover0.620.61
Return on Assets-6.00.77
Return on Equity-18.02.28
Debt Q3 FY14 Q3 FY13
Current Ratio1.811.17
Debt/Capital0.420.39
Interest Expense0.0133.0
Interest Coverage0.02.46


Share Data Q3 FY14 Q3 FY13
Shares outstanding (mil)1177.671069.59
Div / share0.030.03
EPS0.120.02
Book value / share10.5312.02
Institutional Own % n/a n/a
Avg Daily Volume1.8726624E71.4961277E7

Valuation


BUY. This stock?s P/E ratio is negative, making its value useless in the assessment of premium or discount valuation, only displaying that the company has negative earnings per share. For additional comparison, its price-to-book ratio of 1.39 indicates a discount versus the S&P 500 average of 2.49 and a discount versus the industry average of 1.69. The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. After reviewing these and other key valuation criteria, ALCOA INC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
AA NM Peers 28.57   AA 14.02 Peers 13.56

Neutral. The absence of a valid P/E ratio happens when a stock can not be valued on the basis of a negative stream of earnings.

AA's P/E is negative making this valuation measure meaningless.

 

Average. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

AA is trading at a valuation on par to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
AA 14.46 Peers 19.13   AA NA Peers 0.39

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

AA is trading at a valuation on par with its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

Ratio not available.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
AA 1.39 Peers 1.69   AA -944.00 Peers -43.84

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

AA is trading at a discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, AA is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AA 0.74 Peers 2.47   AA -0.99 Peers 46.09

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

AA is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

AA significantly trails its peers on the basis of sales growth

 

 

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