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Alcoa (AA) to Report Q1 Earnings: Is a Beat in the Store?

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Alcoa Corporation (AA - Free Report) is set to release first-quarter 2021 results on Apr 15, after market close.

Notably, the company’s earnings beat estimates in each of the last four quarters, the positive earnings surprise being 45.80%, on average. In the last reported quarter, Alcoa’s earnings of 26 cents per share beat the Zacks Consensus Estimate of 15 cents by 73.33%.

In the past three months, the company’s shares have gained 29.9% compared with the industry’s rise of 12.5%.

Factors at Play

Alcoa is expected to have benefited from increase in aluminum consumption with end-market recovery in the first quarter of 2021. Also, improvement in the shipment volume for bauxite and alumina on higher production is likely to have augmented top-line performance of its Bauxite and Alumina segments in the quarter. In addition, growth in demand for value-add products from the automotive sector is likely to have boosted revenues of the Aluminum segment.

Moreover, Alcoa’s efforts to expand sales of Sustana low carbon products with the addition of EcoSource low carbon alumina are likely to have been beneficial in the quarter. Also, adoption of the company’s new integrated operating model, is likely to have supported its operational performance.

In addition, its focus on productivity, cost-control measures and application of digital technologies in operations are likely to have supported its margins and profitability in the first quarter.

However, fall in internal bauxite pricing and lower earnings from minority owned mines are likely to have adversely impacted the performance of the company’s Bauxite segment. Also, given Alcoa’s extensive geographic presence, its operations are subject to global economic, political risks and forex woes. A stronger U.S. dollar might have hurt the company's overseas business in first-quarter 2021.

The Zacks Consensus Estimate for Alumina and Aluminum segment’s revenues for the first quarter is currently pegged at $1,060 million and $1,795 million, respectively, indicating 13.5% and 6.2% increase from the quarter-ago reported numbers. The consensus estimate for revenues from the Bauxite segment is pegged at $261 million, indicating a sequential decrease of 14.1%.

Earnings Whispers

Our proven model predicts an earnings beat for Alcoa this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. This is the case here as elaborated below.

Earnings ESP: The company has an Earnings ESP of +6.32% as the Most Accurate Estimate is pegged at 51 cents, higher than the Zacks Consensus Estimate of 48 cents.

Alcoa Corp. Price and EPS Surprise

Alcoa Corp. Price and EPS Surprise

Alcoa Corp. price-eps-surprise | Alcoa Corp. Quote

Zacks Rank: Alcoa carries a Zacks Rank #1.

Other Key Picks

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:

Applied Industrial Technologies, Inc. (AIT - Free Report) has an Earnings ESP of +3.59% and a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eaton Corporation, plc (ETN - Free Report) has an Earnings ESP of +0.09% and a Zacks Rank of 3.

Enersys (ENS - Free Report) has an Earnings ESP of +0.78% and a Zacks Rank #3.

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