I place considerable value on EBITDA since it eliminates the effects of financing and accounting decisions. For Alcoa, which is battling a tough aluminum industry, increasing EBITDA is impressive, considering the health of China and other emerging economies upon which Alcoa heavily relies. Management did reaffirm its estimate of 7% growth in demand for aluminum globally in 2013 while projecting 9% to 10% jump in aerospace demand.
Based on Alcoa's performance and growth outlook, investors should be optimistic about the company's future. Alcoa looks much better than its industry does. I still see about 20% upside potential on the basis of improved cash flow and growing ATOI.
At the time of publication, the author held no position in any of the stocks mentioned.