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Alcoa (AA) to Report Q3 Earnings: What's in the Offing?

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Alcoa Corporation (AA - Free Report) is set to release third-quarter 2021 results on Oct 14, after market close.

The company reported better-than-expected results in each of the trailing four quarters. Earnings surprise in the last four quarters was 42.70%, on average. In the last reported quarter, Alcoa’s earnings of $1.49 per share surpassed the Zacks Consensus Estimate of $1.35 by 10.37%.

In the past three months, the company’s shares have gained 23.4% compared with the industry’s rise of 1.6%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Factors to Consider

Alcoa is expected to have benefited from strong demand for aluminum across all its end markets in the third quarter. Higher shipment volume for alumina on strong production and higher prices and improvement in demand for value-add products are likely to have augmented the top-line performance of its Alumina and Aluminum segments, respectively. Also, the company’s focus on improving bauxite shipments with higher production is likely to have boosted revenues of the Bauxite segment.

Alcoa has been witnessing solid customer demand for its Sustana and EcoSource line of products, which is likely to have boosted its performance. Also, the company’s focus on operational execution, cost-control measures, and application of digital technologies in operations might have supported its margins and profitability in the to-be-reported quarter.

However, low third-party shipments and weak pricing for bauxite are likely to have affected the performance of its Bauxite segment. Inflationary pressure on raw materials and energy might also have affected Alcoa’s margins in the quarter.

Owing to the company’s extensive geographic presence, its operations are subject to forex woes. A stronger U.S. dollar might have hurt Alcoa's overseas business in third-quarter 2021.

The Zacks Consensus Estimate for Alumina and Aluminum segment’s revenues for the third quarter is currently pegged at $1,062 million and $2,221 million, respectively, indicating 3% and 5.5% increase from the quarter-ago reported numbers. The consensus estimate for revenues from the Bauxite segment is pegged at $236 million, indicating a sequential increase of 8.3%.

Alcoa Price and EPS Surprise

Alcoa Price and EPS Surprise

Alcoa price-eps-surprise | Alcoa Quote

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. But that is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate is pegged at $1.85.

Zacks Rank: Alcoa carries a Zacks Rank #1.

Stocks to Consider

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

Berry Global Group, Inc. (BERY - Free Report) has an Earnings ESP of +1.78% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rockwell Automation, Inc. (ROK - Free Report) has an Earnings ESP of +2.60% and a Zacks Rank of 3, at present.

W.W. Grainger, Inc. (GWW - Free Report) has an Earnings ESP of +1.13 % and a Zacks Rank of 3.