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Alcoa (AA) Gains But Lags Market: What You Should Know

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Alcoa (AA - Free Report) closed at $34.58 in the latest trading session, marking a +1.11% move from the prior day. The stock lagged the S&P 500's daily gain of 1.86%. Meanwhile, the Dow gained 1.63%, and the Nasdaq, a tech-heavy index, added 2.95%.

Coming into today, shares of the bauxite, alumina and aluminum products company had lost 15.51% in the past month. In that same time, the Industrial Products sector lost 17.92%, while the S&P 500 lost 8.85%.

Investors will be hoping for strength from AA as it approaches its next earnings release, which is expected to be January 16, 2019. The company is expected to report EPS of $0.64, down 38.46% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.51 billion, up 10.64% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.72 per share and revenue of $13.51 billion, which would represent changes of +23.59% and +15.91%, respectively, from the prior year.

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

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 11.86% lower. AA is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that AA has a Forward P/E ratio of 9.2 right now. This valuation marks a no noticeable deviation compared to its industry's average Forward P/E of 9.2.

It is also worth noting that AA currently has a PEG ratio of 1.03. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Metal Products - Distribution was holding an average PEG ratio of 1.03 at yesterday's closing price.

The Metal Products - Distribution industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 101, putting it in the top 40% 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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