UPDATE: Alcoa posts 7 cents per share, vs. expected EPS of 2 cents.

Alcoa Inc reports earnings after closing bell tonight, and analysts generally are expecting a solid report although not yet a full recovery as commodity prices have only more recently begun to pick up steam again.

Alcoa Inc Earnings: Update Expected On Arconic Split

What to expect in Alcoa’s earnings report

On average, Wall Street is looking for earnings of 2 cents per share and $5.14 billion in revenue for the first quarter. That represents a year over year decline because commodity prices remained low through most of the quarter. Also the aluminum manufacturer’s results reflect a lag on some commodity prices, which means the second quarter will be the one to watch.

Estimates not only for Alcoa but also for the entire S&P 500 have been declining steadily as analysts were predicting that the company’s earnings would be flat at the beginning of the year. One bit of good news, however, is that Wall Street is finally starting to slow down the pace of its estimate cuts, reports Bloomberg.

Update on Alcoa’s split expected tonight

One of the topics Alcoa management is expected to discuss on the earnings call tonight is the upcoming split of the businesses. In a Wall Street Journal post, Steven Russolillo argues that Alcoa might be undervalued based on this upcoming split. He believes investors are generally valuing the aluminum manufacturer as a pure commodities play despite the fact that it has many value-added businesses like Aerospace and Automotive. He adds that this is another reason that it makes sense for Alcoa to split up.

The spun-off company will be called Arconic and will hold Alcoa’s Aerospace and Automotive businesses. The separation is expected to be completed sometime later this year. Russolillo notes that the company’s stock surged 20% after the September announcement about the split but that it gave back all the gains after the last disappointing earnings report and as the commodities market remained week.

Further, he notes that Alcoa shares have been tracking with aluminum prices for much of this year, which illustrates his point that investors see it as a pure commodities play even though it really isn’t. Wall Street will be watching and listening carefully tonight to see what management has to say about the split and for updates about the increasingly important Automotive and Aerospace segments.