Back to top

Analyst Blog

Zacks Equity Research

Alcoa to Divest Rockdale Assets

AA RIO

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Aluminum giant Alcoa Inc. (AA - Analyst Report) intends to divest certain assets at its Rockdale, Texas site to Lower Colorado River Authority. The sale will include approximately 34,000 acres of property, all surface and groundwater rights, certain common plant and equipment assets, and Alcoa’s power contracts with Luminant. However, Alcoa did not disclose the terms of the deal.

The deal is expected to close by early next year subject to requisite approvals and fulfillment of necessary conditions. Alcoa also announced that it will retain the ownership of its smelter and aluminum powder operations at the site.

Alcoa had temporarily stalled smelting operations in Rockdale back in 2008 and permanently shut down two of its six lines in January this year to reduce costs due to weak aluminum prices.

Alcoa is a leading producer of primary and fabricated aluminum as well as the world’s largest miner of bauxite and refiner of alumina. The company reported a loss of $2 million (break-even on a per-share basis) in the second quarter of 2012 compared with a profit of $322 million (or 28 cents a share) in the year-ago quarter. The year-over-year decline was due to lower aluminum prices.

Excluding one-time special items (including restructuring and other charges, litigation expenses and tax-related items), Alcoa earned 6 cents a share in the quarter, in line with the Zacks Consensus Estimate but lower than the year-ago earnings of 32 cents per share.

Revenues decreased 9.4% year over year to $5,963 million, but were ahead of the Zacks Consensus Estimate of $5,828 million. While weak aluminum prices dragged down revenues, the company witnessed increased demand across aerospace and automotive markets in the quarter. Aluminum prices dropped 18% year over year and 4% sequentially in the quarter.

Alcoa witnessed strong performances across all its businesses during the quarter, driven by higher utilization rates, process innovations, lower scrap rates and usage reductions. The company expects higher demand for aluminum from automobile, aerospace, packaging and commercial transportation end markets in the near term.

Alcoa competes with Aluminum Corporation of China Limited and RioTinto plc. (RIO - Analyst Report). The stock maintains a Zacks #4 Rank, which translates into a short-term (1 to 3 months) Sell rating.

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

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%