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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 2018 results on Oct 17, after the market closes.
The company reported better-than-expected results in two of the last four quarters, while lagged estimates in two. The average four-quarter positive earnings surprise for the company is 5.79%. In the last reported quarter, Alcoa’s earnings of $1.52 per share surpassed the Zacks Consensus Estimate of $1.33.
In the past three months, the company’s shares have decreased 24.8% compared with 17.6% decline recorded by the industry it belongs to.
Let us see how things are shaping up for Alcoa this quarter.
Factors to Influence Q3 Results
Alcoa is well placed to benefit from its initiatives to reduce complexities of its operations as well as strengthen its balance sheet and reward shareholders with higher returns. It’s worth noting here that efforts to lower pension liabilities are being keenly undertaken by the company.
Though quarterly projections are not available, a look at Alcoa’s annual forecast is likely to provide a picture for the to-be-reported quarter.
Alcoa projects global surplus for bauxite in 2018. Higher demand due to anticipated stockpiles in China will be partially offset by lower demand from other countries and supply increase from Guinea. Alcoa uses most of bauxite production internally to refine to alumina, while the rest is used for third-party businesses, with countries like China. Impact of the ongoing trade dispute between the United States and China is likely to have limited influence on the company’s bauxite operations as it has minimal exposure to China.
For the third quarter of 2018, the Zacks Consensus Estimate for revenues from Bauxite segment is projected to be $316 million, higher than $303 million generated in the second quarter of 2018. Moreover, bauxite production in the to-be-reported quarter is anticipated to grow 8.4% sequentially.
In the Alumina segment, Alcoa projects global deficit in 2018, primarily induced by disrupted supply from the Atlantic region. The company’s own aluminum smelters use most of the alumina produced while the rest is sold globally. Better production volumes and higher prices realized per metric ton will be a boon for the segment’s top line.
For the third quarter of 2018, the Zacks Consensus Estimate for revenues from Alumina segment is projected to be $1,623 million, higher than $1,604 million generated in the second quarter of 2018. Further, alumina production in the quarter is anticipated to grow 4% sequentially.
In the Aluminum segment, trade tariffs remain a hindrance for Alcoa. It believes that its Canadian production, if gets shipped into the United States, is likely to attract import tariffs. On the other hand, the company will be forced to sell its products at lower rates outside the United States to avoid adverse impacts of import tariffs.
For the third quarter of 2018, the Zacks Consensus Estimate for revenues generated from the Aluminum segment is projected to be $2,261 million, lower than $2,417 million generated in the second quarter of 2018. Aluminum production is predicted to grow 1.2%, sequentially, while average price realizations (per metric ton) are likely to slip 16%.
In addition to these, higher raw material costs, especially that of carbon and caustic products, might have an adverse impact on the company’s financials. Moreover, higher tax rate of 40% predicted for the third quarter can be dragging for the company. Tax rate was roughly 32.8% in the first half of 2018.
For 2018, Alcoa decreased its adjusted earnings before interest, tax, depreciation and amortization projection to $3-$3.2 billion from $3.5-$3.7 billion stated earlier.
Earnings Whispers
Our proven model provides some idea on the stocks that are about to release earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The case with Alcoa is given below.
Earnings ESP: Earnings ESP of Alcoa is currently -26.08% as the Most Accurate Estimate of 31 cents is below the Zacks Consensus Estimate of 42 cents.
Zacks Rank: Alcoa currently carries a Zacks Rank #3. This combined with a negative ESP makes earnings surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the Zacks Industrial Products sector that you may want to consider as our model shows that these have the right combination of elements to come up with an earnings beat this quarter:
Flowserve Corporation (FLS - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #2.
Rexnord Corporation has an Earnings ESP of +2.02% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Alcoa (AA) to Report Q3 Earnings: What's in the Offing?
Alcoa Corporation (AA - Free Report) is set to release third-quarter 2018 results on Oct 17, after the market closes.
The company reported better-than-expected results in two of the last four quarters, while lagged estimates in two. The average four-quarter positive earnings surprise for the company is 5.79%. In the last reported quarter, Alcoa’s earnings of $1.52 per share surpassed the Zacks Consensus Estimate of $1.33.
In the past three months, the company’s shares have decreased 24.8% compared with 17.6% decline recorded by the industry it belongs to.
Let us see how things are shaping up for Alcoa this quarter.
Factors to Influence Q3 Results
Alcoa is well placed to benefit from its initiatives to reduce complexities of its operations as well as strengthen its balance sheet and reward shareholders with higher returns. It’s worth noting here that efforts to lower pension liabilities are being keenly undertaken by the company.
Though quarterly projections are not available, a look at Alcoa’s annual forecast is likely to provide a picture for the to-be-reported quarter.
Alcoa projects global surplus for bauxite in 2018. Higher demand due to anticipated stockpiles in China will be partially offset by lower demand from other countries and supply increase from Guinea. Alcoa uses most of bauxite production internally to refine to alumina, while the rest is used for third-party businesses, with countries like China. Impact of the ongoing trade dispute between the United States and China is likely to have limited influence on the company’s bauxite operations as it has minimal exposure to China.
For the third quarter of 2018, the Zacks Consensus Estimate for revenues from Bauxite segment is projected to be $316 million, higher than $303 million generated in the second quarter of 2018. Moreover, bauxite production in the to-be-reported quarter is anticipated to grow 8.4% sequentially.
In the Alumina segment, Alcoa projects global deficit in 2018, primarily induced by disrupted supply from the Atlantic region. The company’s own aluminum smelters use most of the alumina produced while the rest is sold globally. Better production volumes and higher prices realized per metric ton will be a boon for the segment’s top line.
For the third quarter of 2018, the Zacks Consensus Estimate for revenues from Alumina segment is projected to be $1,623 million, higher than $1,604 million generated in the second quarter of 2018. Further, alumina production in the quarter is anticipated to grow 4% sequentially.
In the Aluminum segment, trade tariffs remain a hindrance for Alcoa. It believes that its Canadian production, if gets shipped into the United States, is likely to attract import tariffs. On the other hand, the company will be forced to sell its products at lower rates outside the United States to avoid adverse impacts of import tariffs.
For the third quarter of 2018, the Zacks Consensus Estimate for revenues generated from the Aluminum segment is projected to be $2,261 million, lower than $2,417 million generated in the second quarter of 2018. Aluminum production is predicted to grow 1.2%, sequentially, while average price realizations (per metric ton) are likely to slip 16%.
In addition to these, higher raw material costs, especially that of carbon and caustic products, might have an adverse impact on the company’s financials. Moreover, higher tax rate of 40% predicted for the third quarter can be dragging for the company. Tax rate was roughly 32.8% in the first half of 2018.
For 2018, Alcoa decreased its adjusted earnings before interest, tax, depreciation and amortization projection to $3-$3.2 billion from $3.5-$3.7 billion stated earlier.
Earnings Whispers
Our proven model provides some idea on the stocks that are about to release earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The case with Alcoa is given below.
Earnings ESP: Earnings ESP of Alcoa is currently -26.08% as the Most Accurate Estimate of 31 cents is below the Zacks Consensus Estimate of 42 cents.
Alcoa Corp. Price, Consensus and EPS Surprise
Alcoa Corp. Price, Consensus and EPS Surprise | Alcoa Corp. Quote
Zacks Rank: Alcoa currently carries a Zacks Rank #3. This combined with a negative ESP makes earnings surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the Zacks Industrial Products sector that you may want to consider as our model shows that these have the right combination of elements to come up with an earnings beat this quarter:
Tetra Tech, Inc. (TTEK - Free Report) has an Earnings ESP of +0.96% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Flowserve Corporation (FLS - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #2.
Rexnord Corporation has an Earnings ESP of +2.02% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>