What Alcoa Investors Fear the Most: Earnings Preview

NEW YORK (TheStreet) -- Aluminum giant Alcoa (AA) is still working its way back to full strength. But with the company's year-to-date stock gains of 21%, Alcoa is making 2013 look like a distant memory. Let's recall, this is the same company that was kicked out of the Dow Jones Industrial Average last year.

Alcoa investors aren't taking chances. With shares now up 65% from their October low, investors are anxious for some confirmation that Alcoa won't lose its luster. Deutsche Bank analyst Jorge Beristain still has a sell recommendation on the stock, with a price target of $5.50. This suggests a 48% decline from Friday's closing price of $12.63 and Monday's price of $12.56 as of 11:30 a.m.

Alcoa will report first-quarter earnings results Tuesday. Although the Street is warming up to the idea of better pricing environments, there's still a "wait-and-see" attitude. Management deserves credit for making productivity improvements and navigating a brutal aluminum pricing market. But that's as far as it goes. Analysts like Beristain don't reward feel-good stories. They want growth. And that's what's going to propel this stock forward.

On Tuesday the street will be looking for 5 cents in earnings per share on revenue of $5.59 billion. This would represent a year-over-year revenue decline of 4.2%, with a 54% decline in earnings per share.

These two metrics hit at the heart of what investors fear the most. But there's more to it than that.

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