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Alcoa (AA) Dips More Than Broader Market: What You Should Know

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The latest trading session saw Alcoa (AA - Free Report) ending at $30.02, denoting a -1.77% adjustment from its last day's close. The stock fell short of the S&P 500, which registered a loss of 0.29% for the day. Elsewhere, the Dow saw a downswing of 0.35%, while the tech-heavy Nasdaq depreciated by 0.3%.

Coming into today, shares of the bauxite, alumina and aluminum products company had gained 14.07% in the past month. In that same time, the Industrial Products sector gained 7%, while the S&P 500 gained 4.42%.

Market participants will be closely following the financial results of Alcoa in its upcoming release. The company is forecasted to report an EPS of -$0.20, showcasing a 13.04% upward movement from the corresponding quarter of the prior year. Meanwhile, the latest consensus estimate predicts the revenue to be $2.54 billion, indicating a 4.83% decrease compared to the same quarter of the previous year.

For the full year, the Zacks Consensus Estimates project earnings of $0.33 per share and a revenue of $10.62 billion, demonstrating changes of +114.54% and +0.62%, respectively, from the preceding year.

Investors should also note any recent changes to analyst estimates for Alcoa. Such recent modifications usually signify the changing landscape of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 41.41% lower. At present, Alcoa boasts a Zacks Rank of #3 (Hold).

In the context of valuation, Alcoa is at present trading with a Forward P/E ratio of 93.55. This signifies a premium in comparison to the average Forward P/E of 10.6 for its industry.

One should further note that AA currently holds a PEG ratio of 2.11. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The average PEG ratio for the Metal Products - Distribution industry stood at 2.11 at the close of the market yesterday.

The Metal Products - Distribution industry is part of the Industrial Products sector. This industry currently has a Zacks Industry Rank of 35, which puts it in the top 14% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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