Earnings season is officially underway. Alcoa, Inc. (NYSE: AA) usually has a little something of everything for bulls and bears alike in its earnings reports. Today is no different because the aluminum giant beat on earnings but was a tad soft on revenues. Where this will get interesting is that shares at one point on Friday were up as much as 20% year-to-date in 2011.
If you back out items, Alcoa earned $0.28 EPS and $5.96 billion. Thomson Reuters had estimates of $0.27 EPS and $6.07 billion in revenues. The good news is that this represents a 20% rise in reported income and a 22% rise in revenues from a year ago.
The company also reaffirmed its 2011 global aluminum demand growth projection of 12%. For the gains, it cited higher realized prices for alumina and aluminum, growing demand for aluminum products in major end markets, and productivity gains. For the rest of 2011, Alcoa sees growth factors being a growing population, more urbanization, and aluminum’s advantages as a light, strong and recyclable material. That did not exactly exude “massive growth demand for the new world.” Alcoa further noted being on track to meet its 2011 financial targets with a 130 basis point improvement in its debt-to-capital ratio rising to 33.6%.
Alcoa shares ended 2010 at $15.36 but shares closed down 0.8% at $17.77 and the stock hit a 52-week high of $18.47 just on Friday. One day the company will just have a hands down win that doesn’t have mixed messages versus what analysts were expecting ahead of time.
Thomson Reuters has a mean price target objective of $19.93 for Alcoa. We see no reason to panic here with its growth reported today, but there is little reason to get overly excited after the run-up we have seen.
JON C. OGG