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Alcoa's Aluminum Segment Gains Momentum: Can it Sustain?

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Key Takeaways

  • AA's Aluminum segment benefited from strong electrical and packaging demand in North America and Europe.
  • Alcoa's Q3 aluminum output rose sequentially, while higher realized prices lifted third-party revenues.
  • AA expects 2025 aluminum production of 2.3-2.5 million tonnes, with shipments seen at 2.5-2.6 million.

Alcoa Corporation’s (AA - Free Report) Aluminum segment is benefiting from strong demand in the electrical and packaging end markets in North America and Europe and continued progress on the San Ciprián, Spain smelter restart.

Demand for aluminum has grown significantly over the years, with rising popularity for lighter and energy-efficient electric vehicles, recycled aluminum and rechargeable batteries. The increase in global air travel has prompted aircraft manufacturers to ramp up production, spurring demand for aluminum alloys for fuselages and wings.

In the third quarter of 2025, Alcoa’s production from the Aluminum segment increased 1% on a sequential basis to 579,000 metric tons. The segment’s third-party revenues were up 4%, supported by an increase in average realized third-party price. It’s worth noting that the U.S. administration in June 2025 increased tariffs on imported aluminum to 50% as a measure to correct trade imbalances and boost the domestic industry. The move has increased aluminum prices, thereby benefiting domestic producers like Alcoa.

Amid this, Alcoa provided a healthy outlook for the segment’s production and shipment volume. For 2025, AA expects the Aluminum segment to produce 2.3-2.5 million tonnes, while shipments are anticipated to be in the band of 2.5-2.6 million tonnes.

Segment Snapshot of AA's Peers

The strongest driver of Constellium SE’s (CSTM - Free Report) business at the moment is the Packaging & Automotive Rolled Products segment. The segment’s shipments increased 4% year over year to 820,000 metric tons in the first nine months of 2025, buoyed by a robust demand environment. Revenues from the segment increased 17% to $3.2 billion, supported by higher metal prices.

In third-quarter 2025, Olympic Steel, Inc.’s (ZEUS - Free Report) Specialty Metals Flat Products segment recorded its strongest shipping quarterly volume in the last three years. The segment’s shipments increased 6.1% year over year to 96,911 metric tons in the first nine months of 2025, buoyed by a robust demand environment. Revenues from the segment were up 5% to $405.1 million.

AA’s Price Performance, Valuation and Estimates

Shares of Alcoa have gained 27.2% in the past month compared with the industry’s growth of 24.1%.

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From a valuation standpoint, AA is trading at a forward price-to-earnings ratio of 12.28X, above the industry’s average of 11.80X. Alcoa carries a Value Score of B.

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The Zacks Consensus Estimate for AA’s 2025 earnings has increased 7.5% over the past 60 days.

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The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


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