This Day On The Street
Continue to site
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

Alcoa Is Shining Brighter

NEW YORK ( TheStreet) -- Alcoa's (AA - Get Report) 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AA $11.18 0.22%
AAPL $93.75 -1.10%
FB $117.53 0.69%
GOOG $693.00 0.29%
TSLA $240.75 -2.80%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs