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Alcoa (AA) Gains As Market Dips: What You Should Know

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In the latest trading session, Alcoa (AA - Free Report) closed at $44.86, marking a +1.49% move from the previous day. This move outpaced the S&P 500's daily loss of 0.41%. At the same time, the Dow added 0.11%, and the tech-heavy Nasdaq lost 6.67%.

Coming into today, shares of the bauxite, alumina and aluminum products company had lost 4.8% in the past month. In that same time, the Industrial Products sector lost 3.13%, while the S&P 500 lost 4.4%.

Investors will be hoping for strength from Alcoa as it approaches its next earnings release. The company is expected to report EPS of -$0.82, down 132.8% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.59 billion, down 22.37% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.58 per share and revenue of $12.38 billion. These totals would mark changes of -32.94% and +1.88%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Alcoa. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 3.37% lower. Alcoa is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note Alcoa's current valuation metrics, including its Forward P/E ratio of 9.64. Its industry sports an average Forward P/E of 7.14, so we one might conclude that Alcoa is trading at a premium comparatively.

Investors should also note that AA has a PEG ratio of 0.78 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Metal Products - Distribution was holding an average PEG ratio of 3.11 at yesterday's closing price.

The Metal Products - Distribution industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 90, which puts it in the top 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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