Back to top

Analyst Blog

Aluminum giant, Alcoa Inc. (AA - Analyst Report) struck a deal with Brookfield Renewable Energy Partners to sell its Tapoco Hydroelectric Project. Alcoa expects to receive $600 million from the sale, which is expected to close by the end of 2012.

The 351-megawatt Tapoco Hydroelectric project is located on the Little Tennessee and Cheoah Rivers in eastern Tennessee and western North Carolina. It is operated by the wholly owned subsidiary of Alcoa, known as Alcoa Power Generating Inc. The deal includes four generating stations and dams along the Little Tennessee and Cheoah rivers, 86 miles of transmission line and 14,500 acres of land. J.P. Morgan is the advisor for Alcoa in the transaction.

Brookfield Renewable Energy Partners operates renewable power platforms globally. Its portfolio is primarily hydroelectric, with about 5,000 megawatts of installed capacity.

Pennsylvania-based Alcoa Inc. is among the world’s leading producers of primary and fabricated aluminum and alumina. The company is engaged in mining, refining, smelting, fabricating and recycling of aluminum.

Few months back, Alcoa released its first-quarter 2012 results. The company reported earnings of 9 cents per share in the quarter, down drastically from earnings of 27 cents in the first quarter of 2011. Excluding restructuring charges and other items, Alcoa's profit came in at 10 cents per share, beating the Zacks Consensus Estimate of a loss of 4 cents, but missing the year-ago profit of 28 cents. The impressive results were attributable to higher production and volumes, and improved market conditions.

Quarterly revenues inched up 0.3% sequentially to $6,006 million and edged up 0.8% over the prior-year quarter. It surpassed the Zacks Consensus Estimate of $5,735 million. The increase in revenues was driven by strong results in the company’s Global Rolled Products and Engineered Products and Solutions businesses.

Alcoa competes with Aluminum Corporation of China Limited and RioTinto plc. (RIO - Analyst Report). Currently, the stock maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.
 

Please login to Zacks.com or register to post a comment.