NEW YORK (TheStreet) -- Shares of Alcoa (AA - Get Report) were gaining 2.9% to $9.59 Thursday after the aluminum producer announced plans for a new research and development center for advanced 3D printing processes.
Alcoa said it will spend $60 million to expand its R&D center in Pennsylvania to accelerate the development of advanced 3D printing materials and processes.
The company plans to produce materials designed for a range of additive technologies to meet demand for "complex, high-performance 3D-printed parts," for the aerospace, automotive, medical, and construction markets in the new facility.
The company said construction of the new facility is expected to be completed in the first half of 2016.
"Combining our expertise in metal alloys, manufacturing, design and product qualification, we will push beyond the limits of today's additive manufacturing," Alcoa chairman and CEO Klaus Kleinfeld said in a statement. "This investment strengthens our leadership position in meeting fast-growing demand for aerospace components made using additive technologies."
TheStreet Ratings team rates ALCOA INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALCOA INC (AA) a HOLD. The primary factors that have impacted our rating are mixed – some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 27.2%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Metals & Mining industry average. The net income increased by 1.4% when compared to the same quarter one year prior, going from $138.00 million to $140.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ALCOA INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Looking at the price performance of AA's shares over the past 12 months, there is not much good news to report: the stock is down 46.98%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- AA's debt-to-equity ratio of 0.71 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. Despite the fact that AA's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
- You can view the full analysis from the report here: AA Ratings Report