Alcoa Beat Estimates: A Positive Start To Earnings Season

Alcoa Beat Estimates: A Positive Start To Earnings Season
By Alcoa ( [Public domain], via Wikimedia Commons

Aluminum giant Alcoa Inc. (NYSE:AA) announced its earnings this afternoon after the market closed . The company revealed that in the period ending on the 31st September, it earned around three cents per share, excluding items. The company reported revenues of $5.83 billion for the same period.

Alcoa Beat Estimates: A Positive Start To Earnings Season

Including all items, the firm lost 15 cents in the period.

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Alcoa Inc. (NYSE:AA) is the first of the companies listed on the Dow Jones to report their earnings, and is usually seen as a proxy for the wider market’s performance, early on in the earnings season. With more and more investors worried about the stability of equity prices in the current macroeconomic climate, Alcoa’s earnings will be extremely important this time around.

Analysts are expecting the company to post a break even quarter. The same analysts projected that the company would garner revenues of $5.9 billion in the same three months. Alcoa Inc. (NYSE:AA) reported a loss in the second quarter of 2012.

The company has a recent history of negatively surprising Wall Street. In the last four quarterly reports the company filed, half were negative surprises. As the market opens tomorrow, investors will be taking the company’s numbers under advisement. Industrial stocks will be the first affected, while knocks will be felt throughout the market.

In the same quarter last year, Alcoa Inc. (NYSE:AA) announced profits of 15 cents per share, on revenue of $5.62 billion. Those comparing the two numbers will be disappointed, thought there are clear macroeconomic pressures pushing on the firm’s bottom line. This year’s results have not been as healthy, but they could certainly have been worse.

China is demanding less aluminum, and is expected to demand less going forward, according to the firm’s guidance. Rough times are ahead for the world’s leading aluminum supplier, cost cutting measures may be necessary to bring the company back to real profitability, and real growth.

Aluminum supply is a somewhat cyclical business, and Alcoa is certainly seeing a downturn. Whether or not the firm’s business is likely to recover without a real global recovery is debatable.

The optimistic start to this quarter’s earnings season, delivered by the Alcoa Inc. (NYSE:AA) executives, will hopefully provide the market with a lift going into the rest of the period. News that the depressed world economy is recovering, even remotely faster than is expected, will be greeted with great enthusiasm.

Likewise Alcoa Inc. (NYSE:AA) will be happy with today’s results. As of writing, the firm’s shares have risen by two thirds of a percent.

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