This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Alcoa Is Shining Brighter

Stocks in this article: AA F BA GE

NEW YORK ( TheStreet) -- Alcoa's (AA) royalty status on the stock market often comes into question. In my opinion, it's deserved.

Aside from being the U.S.'s largest producer of aluminum, the blue-chip Dow component also serves as a gauge for what might be expected each earnings season when it reports. If Alcoa's fourth-quarter report is any indication, investors would be wise to get their buy orders in early for companies that will report next.

A Brighter Outlook

On Tuesday, the aluminum giant reported income of $242 million, or 21 cents per share. This compares favorably to a loss of $193 million in the fourth quarter of 2011. Revenue arrived at $5.9 billion. Although this represents a 2% decline year over year, revenue advanced 1% sequentially. This was attributed to a 5% improvement in aluminum prices, which has hurt the entire industry all year.

For the full fiscal year, Alcoa posted net income of $191 million, or 18 cents per share. While this figure is significantly lower than the $614 million for fiscal-year 2011, aluminum prices have also fallen 12% year over year, affecting the market by $1 billion.

All year Alcoa has had to do more with less. Despite these obstacles, the company still managed to meet its profit and capital sustainability goals, a streak that now reached four years in a row.

For the performance, Klaus Kleinfeld, Alcoa's chairman and chief executive, 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.

It's hard to disagree with this statement. What's more, the company's net debt position ($1.9 billion) is at its lowest in seven years. This is arguably management's best performance by far, especially considering the recent poor economics of the industry. And things are just beginning to get better.

Guidance for the Year

Alcoa said in the third quarter that it saw aluminum demand growth of 6% for 2013. However, during the fourth-quarter conference call, management upgraded the outlook by 1% to 7%. This is important because the company's original forecast that aluminum demand would double by 2020 requires current demand of at least 6.5%. This is since 2010 and 2011 produced aggregate growth of 23%.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs