Alcoa Still Making Best of Bad Situation

NEW YORK ( TheStreet) -- "Making the best out of a bad situation" seems to be the recurring theme for Alcoa ( AA), which has had a difficult time overcoming a weak aluminum pricing environment. Heading into the company's first-quarter report, there's been plenty of frustration about the lack of movement in the stock. However, some perspective is necessary.

While management does have a strong track record of solid performances, they are not magicians. At least not to the extent that they can manufacture demand out of thin air. Besides, it's not as if Alcoa has been outperformed by rivals like Commercial Metals ( CMS), either. To that end, given Alcoa's solid fiscal first-quarter results, the company deserves some more time.

Good Start to the Fiscal Year

Given the state of the aluminum industry, the Street wasn't expecting a heck of a lot from Alcoa. Although the results were far from robust, management nonetheless demonstrated progress. This is despite posting revenue that fell short of estimates. But the company reported an increase in quarterly profits on the strength of its primary metals and alumina segments.

Net income arrived at $149 million, or 13 cents a share. This compares favorably to net income of $94 million, or 9 cents per share the company earned a year ago. When excluding items, the company posted earnings of 11 cents per share, which was a penny higher year over year.

Granted, these were not great numbers when compared to Alcoa's historical performances. Soft production shipments had a considerable negative impact. And as noted, the mediocre prices of aluminum didn't help. Nonetheless, the company still managed to beat Street EPS estimates. Analysts were expecting 8 cents a share.

What's more, although consensus estimates had come down from 10 cents per share, Alcoa still would have logged a beat. But revenue was a different story -- dropping 3% year over year to $5.83 billion. But the miss was only marginal in terms of expectations. The Street was calling for sales of $5.88 billion -- essentially, the margin of the miss was less than 1%. In this environment, that should count as a beat.

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