Alcoa Unable to Generate Real Earnings Buzz

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Alcoa Inc. (NYSE: AA) had been volatile ahead of earnings, hitting a 52-week high just before the report. Now we have the earnings report, and it will be interesting to see if the market treats Alcoa as systemically important to earnings season now that it has been booted out of the Dow Jones Industrial Average.

Alcoa’s headline loss was $2.3 billion, but that was due to charges. it generated some $920 million in cash from operations. Revenue was $5.6 billion, and the company even cited that realized aluminum price being 7% lower from the fourth quarter a year ago. Alcoa’s special items from the quarter were $2.4 billion. Net income outside of items was 440 million, or $0.04 in earnings per share.

Thomson Reuters was calling for normalized earnings of $0.06 per share on revenue of $5.38 billion. The same report from last year was $0.06 in earnings per share on $5.90 billion in revenue.

Alcoa said that its value-added businesses drove 57% of its revenues and 80% of its segment profits. The company is also forecasting 7% Growth in global aluminum demand in 2014. Here are the segment growth targets for 2014 by Alcoa:

  • aerospace (7 percent to 8 percent),
  • automotive (1 percent to 4 percent),
  • packaging (2 percent to 3 percent),
  • building and construction (4 percent to 6 percent)
  • commercial transportation market (-1 percent to 3 percent)
  • and industrial gas turbine market (-8 percent to -12 percent).

Alcoa hit a 52-week high of $10.90 shortly before earnings, but the stock closed down 1.45 at $10.68. The initial response to earnings is that shares are down another 3.2% at $10.34 in the after-hours market reaction.