NEW YORK (AP) â¿¿ Shares of Alcoa Inc. rose before Wednesday's opening bell after the aluminum maker posted a slim third-quarter profit, reversing a year-ago loss, despite lower aluminum prices.
Alcoa got a boost from demand for its products from automakers, along with cost cuts. Its adjusted profit of 11 cents per share was more than double the 5 cents per shares analysts polled by FactSet expected.
Alcoa pointed to higher productivity and strong results in its engineered-products and rolled-aluminum units, which now account for more than half its revenue. The company sells rolled aluminum sheets to automakers, which are using more of the products as part of attempts to boost fuel mileage by producing lighter vehicles.
Meanwhile, Alcoa said the commodity end of its business â¿¿ mining and smelting â¿¿ performed better in a tough market.Citi analyst Brian Yu backed his "Neutral" rating and $9 price target for Alcoa stock, but boosted his 2013 profit prediction by 6 cents to 34 cents, while analysts polled by FactSet expect 28 cents per share. "We are impressed by Alcoa's third-quarter results, especially on the cost side," Yu wrote in a note to investors. "However, the company will continue to struggle to reach positive free cash flow, which makes it difficult for us to recommend the stock here given the sizable aluminum inventory overhang." Alcoa used to be considered the leadoff company for earnings season because it was the first member of the Dow Jones industrial average to report results each quarter. But last month the Dow index operators dropped Alcoa, due partly to its sagging stock price. Still, investors are likely to keep watching Alcoa for hints about demand for aluminum, a key material in airplanes, automobiles and many consumer products. In premarket trading, Alcoa shares rose 19 cents, or 2.4 percent, to $8.13.