Trade-Ideas LLC identified

Alcoa

(

AA

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Alcoa as such a stock due to the following factors:

  • AA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $360.4 million.
  • AA has traded 17.8 million shares today.
  • AA is down 3.1% today.
  • AA was up 5.2% yesterday.

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More details on AA:

Alcoa Inc. produces and manages primary aluminum, fabricated aluminum, and alumina worldwide. The company operates through four segments: Alumina, Primary Metals, Global Rolled Products, and Engineered Products and Solutions. The stock currently has a dividend yield of 1.8%. Currently there are 6 analysts that rate Alcoa a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Alcoa has been 32.0 million shares per day over the past 30 days. Alcoa has a market cap of $8.8 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 0.28 and a short float of 11.5% with 2.67 days to cover. Shares are down 28.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Alcoa as a

hold

. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • Despite the weak revenue results, AA has outperformed against the industry average of 46.0%. Since the same quarter one year prior, revenues fell by 17.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • AA's debt-to-equity ratio of 0.74 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.73 is weak.
  • ALCOA INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ALCOA INC swung to a loss, reporting -$0.13 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($0.35 versus -$0.13).
  • The gross profit margin for ALCOA INC is rather low; currently it is at 16.03%. It has decreased from the same quarter the previous year.
  • Net operating cash flow has decreased to $865.00 million or 40.67% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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