NEW YORK (TheStreet) -- Shares of Alcoa (AA) fell in morning trading Tuesday after the world's third-largest aluminum producer announced a public offering of 25 million depositary shares to help fund its acquisition of Firth Rixson.
The offering could reach 28.75 million depositary shares if underwriters exercise their full overallotment option of 3.75 million shares. Each depositary share represents a one-tenth interest in a share of Alcoa's Class B Mandatory Convertible Preferred Stock, Series 1, par value $1 a share, $500 liquidation preference per share of mandatory convertible preferred stock, equivalent to $50 per depositary share.
The stock was down 0.67% to $16.28 at 10:52 a.m.
Separately, TheStreet Ratings team rates ALCOA INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALCOA INC (AA) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, growth in earnings per share and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Metals & Mining industry average. The net income increased by 216.0% when compared to the same quarter one year prior, rising from -$119.00 million to $138.00 million.
- Powered by its strong earnings growth of 209.09% and other important driving factors, this stock has surged by 106.34% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- ALCOA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALCOA INC swung to a loss, reporting -$2.15 versus $0.17 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus -$2.15).
- Net operating cash flow has remained constant at $518.00 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -10.25%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: AA Ratings Report
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