Investors have to remember that companies don't go out of their way to make promises that they don't intend to keep -- especially when it is understandable that Wall Street expectations have already been lowered due to business economics. What I have found impressive in all of this is that analysts continue to present Alcoa with an "easy out." But remarkably, the company continues to say, no thank you.
Bottom lineIt seems that Wall Street remains unimpressed and refuses to credit the company for not only managing a difficult aluminum market but also continuing to make productivity improvements. The fact of the matter is, though the aluminum business is still perceived today as having bad economics, the current long-term fundamentals of the market looks much better than the discount currently being applied today. From that standpoint, I see Alcoa's shares as being significantly undervalued by at least 20% below its most recent closing price. And it doesn't hurt to know that the company is under the careful watch of a management team with a reputation for brilliance.
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