NEW YORK (TheStreet) -- Alcoa (AA) - Get Report shares are increasing 0.89% to $9.03 on Friday after the lightweight metals company opened its facility in Indiana in an effort to meet rising demand from aerospace engine manufacturers.
The production of nickel-based structural components for the industry's jet engines widens the company's footprint in the aerospace market, the company said.
"We combined some of the world's best metallurgists, product engineers and manufacturing experts to broaden our capabilities and deliver the highly advanced components our customers need to build jet engines at high volumes," CEO Klaus Kleinfeld stated.
Alcoa added that the 320,000 square foot expansion cost about $100 million and will create about 329 additional jobs by 2019.
Separately, aluminum prices have been hurt by a worsening supply glut, which is threatening producers globally, Bloomberg reports.
Based in New York, Alcoa produces and manages primary aluminum, fabricated aluminum, and alumina worldwide.
Separately, TheStreet Ratings team rates ALCOA INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate ALCOA INC (AA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 68.67% to $420.00 million when compared to the same quarter last year. In addition, ALCOA INC has also vastly surpassed the industry average cash flow growth rate of -54.64%.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ALCOA INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.62%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 83.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The gross profit margin for ALCOA INC is rather low; currently it is at 18.19%. It has decreased from the same quarter the previous year.
- You can view the full analysis from the report here: AA