16 Oct

Alcoa: Key Updates Markets Might Watch

WRITTEN BY Mark O'Hara FEATURED IN Pre-Release Earnings Reports

Alcoa

In the previous part, we discussed analysts’ projections for Alcoa’s (AA) third-quarter earnings. In this part, we’ll look at the key updates that markets might watch in Alcoa’s third-quarter earnings call.

Alcoa: Key Updates Markets Might Watch

Earnings guidance

During the second-quarter earnings release, Alcoa lowered its 2018 adjusted EBITDA guidance to $3.0 billion–$3.2 billion from the previous guidance of $3.5 billion–$3.7 billion. The guidance assumed unpriced aluminum sales at $2,100 per metric ton and an API (Alumina Price Index) of $465 per metric ton. During the third-quarter earnings call, markets will likely watch Alcoa’s updated 2018 guidance. The company’s API assumption would be crucial because alumina prices have been volatile this year. Companies like Century Aluminum (CENX) are negatively impacted when alumina prices rise. The companies buy alumina from outside parties. However, integrated producers like Rio Tinto (RIO), that also sell alumina, stand to gain from higher alumina prices (XME).

China

During the second-quarter earnings call, Alcoa predicted a wider deficit in aluminum markets from its previous projection. As we noted in Part 1, China’s aluminum demand growth rates look to have cooled off—reflected in falling car sales and moderating real estate activity. During the third-quarter earnings call, markets will likely watch Alcoa’s views on global aluminum markets due to the backdrop of the US-China trade war. Notably, the International Monetary Fund decreased its growth outlook amid concerns about global growth. Metal demand is closely tied to economic activity.

Don’t forget to visit Market Realist’s Basic Materials page for Alcoa’s post-earnings analysis.

Read Alcoa: Should You Be Bottom Fishing? to see whether Alcoa offers value at the current stock prices.

Latest articles

Freeport-McMoRan (FCX) is scheduled to release its first-quarter earnings on April 25.

23 Apr

How Ford Stock Is Faring ahead of Q1 Earnings

WRITTEN BY John Parker

Ford has risen 8.2% in April so far as compared to 2.6% gains in the S&P 500 Index.

23 Apr

Natural Gas Recovery Might Fade Away

WRITTEN BY Robert Scott

On April 22, natural gas prices settled at $2.52 per MMBtu—1.4% above the lowest closing level for active natural gas futures since June 8, 2016.

Kimberly-Clark (KMB) stock rose 5.4% on April 22 after the company released stronger-than-expected first-quarter results.

Alaska Air Group (ALK) plans to report its first-quarter earnings results on April 25.

Recently, Bank of America Merrill Lynch initiated coverage on Cronos Group (CRON) with an "underperform" rating.