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Is Alcoa (AA) Set to Beat Q1 Earnings Estimates?

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Shares of Alcoa (AA - Free Report) soared over 6.8% on Tuesday as part of a nearly weeklong surge that might signal investors are confident ahead of Alcoa’s upcoming first quarter financial results. The question is: Should they be?

Alcoa saw its stock price stink, along with many other steel and aluminum manufacturers, when President Donald Trump announced his tariffs. The stock has recovered since then and is currently trading near its January highs, despite Wednesday’s dip.

Still, while some trade war fears have been eased, volatility is likely to remain in the near-term. This means that investors should focus on how Alcoa will perform in Q1 before any possible tariff-related setbacks might truly kick in.

Let’s take a look at our projections.

Q1 Outlook

Our current Zacks Consensus Estimates are calling for Alcoa’s Q1 revenues to surge by 17.2% to reach $3.11 billion. Meanwhile, the aluminum power’s quarterly earnings are also projected to climb 3.2% to hit $0.65 per share. Alcoa has also experienced solid earnings estimate revision activity recently.

With that said, these estimates don’t give investors any idea if Alcoa is actually projected to top our current earnings estimates, which is what many will be hoping for. Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Alcoa is currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 9.23%. This means investors should consider Alcoa a stock that looks positioned to beat Q1 earnings estimates.

The Pittsburgh-based company is scheduled to report its first quarter earnings results after market close on Wednesday, April 18.

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