NEW YORK ( TheStreet) -- I don't always talk about industrial stocks, but when I do, I prefer Alcoa ( AA). And that's because Alcoa is the most interesting company in what has been a brutal industry -- aluminum -- over the past couple of years.During that period I've been beating the patience drum to anyone who would listen and detailing the prospects of not only a recovery in the price of aluminum but of the value that remains in Alcoa's stock. I won't argue that my optimism has yet to translate into meaningful results. But Alcoa's management continues to make the best of a bad situation. Although the management team does have a strong track record of solid execution, that doesn't mean it is able to manufacture growth out of thin air. BHP) posted revenue declines of more than 14%. With fiscal second-quarter earnings due out Monday, I believe it's time to reshift our focus on Alcoa's performance. I won't disagree that revenue growth is important. But I also don't expect a significant year-over-year improvement, either. Analysts are expecting second-quarter sales to come in flat to lower by as much as 20 basis points. Truth be told, it would surprise me if the company posted any positive sales growth at all. Don't mistake this for a knock on the company's ability. But after watching the sluggish nature of this industry for more than three years, I think it's now important for investors to lessen their focus on aluminum demand and start appraising Alcoa more on its segmental performances -- particularly its respective after-tax-operating-income (ATOI) results.
Even more impressive was that the 6% sequential climb in third-party revenue, which was also up 2% year over year. But here's the key -- and what the Street missed in the first quarter: The company's ATOI jumped sequentially by $33 million and was $16 million higher year over year. Although investors bemoaned the 3% revenue decline, the Street overlooked that management was able to increase volumes and productivity gains across each business segment. Let's not also forget that even though the numbers were weak in areas such as commercial transportation and nonresidential construction, management was able to balance that with better performances in aerospace. All of which contributed to a $4 million sequential improvement in ATOI, helped by higher utilization and favorable volume. That's not something that is easy to accomplish, which is why I've often sang the praises of this management team. And I don't expect to be silenced after Monday's report. The point is, even though investors have valid reasons to be frustrated with the stock's underperformance, management, on the other hand, has outperformed. But you have to know where to look. But it's all relative. And Alcoa has been outperformed by rivals such as Commercial Metals ( CMC) and Century Aluminum ( CENX). we've been at this for a while. And panicking in quicksand has never proven effective. It's worth noting, though, that management remains upbeat about the company's prospects, saying that it expects 7% demand growth in aluminum for the fiscal year, which is consistent with prior guidance. Finally, I don't believe it's premature to say that the worst is over for Alcoa. And at this point I'm willing to separate the aluminum industry's overall struggles from Alcoa's real underlying value. That is to say, I believe the stock today is worth much more than its business. I still see about 20% upside potential on the basis of better ATOI and the prospect of improved aluminum prices. At the time of publication, the author held no positions in any of the stocks mentioned. Follow @saintssense This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.