Education
About Us
Working with TipRanks
Follow Us
Alcoa (AA)
NYSE:AA
Top Page
Alcoa
(NYSE:AA)
67Neutral
Positive Factors
Cash Flow
Free cash flow significantly beat expectations, which should lead to a reduction in net debt and a higher valuation for Alcoa.
Tax Credits
The company will be receiving IRA production tax credits for aluminum production in the US of ~$50-60m per year.
Negative Factors
Capital Expenditure
Alcoa's capex profile is higher than previously expected, which is seen as a negative.
Alcoa (AA) vs. S&P 500 (SPY)
Market Cap
$8.27B
Dividend Yield1.29%
Average Volume (3M)4.86M
Price to Earnings (P/E)110.5
Beta (1Y)2.04
Revenue Growth14.80%
EPS Growth96.53%
CountryUS
Employees13,900
SectorBasic Materials
Sector Strength62
IndustryMining
Share Statistics
EPS (TTM)-0.14
Shares Outstanding258,884,340
10 Day Avg. Volume5,053,357
30 Day Avg. Volume4,864,819
Financial Highlights & Ratios
PEG Ratio1.14
Price to Book (P/B)N/A
Price to Sales (P/S)0.67
Price to Cash Flow (P/CF)4.80
P/FCF Ratio4.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$46.67Price Target Upside40.36% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Alcoa Business Overview & Revenue Model
Company DescriptionAlcoa Corp. engages in the production of bauxite, alumina, and aluminum products. It operates through the following segments: Bauxite, Alumina, and Aluminum. The Bauxite segment represents the company' global bauxite mining operations. The Alumina segment includes the company's worldwide refining system, which processes bauxite into alumina. The Aluminum segment combines smelting and casting operations produce primary aluminum. The smelting operations produce molten primary aluminum, which is then formed by the casting operations into either foundry ingot or into value add ingot products, including billet, rod, and slab. The company was founded by Charles Martin Hall on July 9, 1886 and is headquartered in Pittsburgh, PA.
How the Company Makes MoneyAlcoa makes money primarily through the sale of bauxite, alumina, and aluminum products. The company operates across three main segments: Bauxite, Alumina, and Aluminum. The Bauxite segment involves mining and selling bauxite to both internal and external customers. The Alumina segment focuses on refining bauxite into alumina, which is then sold to aluminum producers, including Alcoa's own Aluminum segment. The Aluminum segment involves the smelting of alumina into primary aluminum, which is further processed and sold as value-added products to various industries. Alcoa's revenue model is heavily influenced by the global demand and pricing of aluminum and alumina, as well as its operational efficiency and strategic partnerships with other companies in the supply chain.
Alcoa Financial Statement Overview
Summary
Alcoa's financial performance shows a strong recovery in profitability, with improved income statement metrics like a positive net profit margin and robust revenue growth. The balance sheet is solid, indicating low leverage risk and strong equity standing. However, cash flow remains a concern due to negative free cash flow, impacting liquidity.Income Statement
The company shows a strong recovery in profitability with a significant improvement in gross profit margin from previous years, reaching 35.86% TTM. Net profit margin turned positive to 0.51% TTM from a loss in prior periods, indicating improved operational efficiency. Revenue growth of 12.04% TTM is robust, though fluctuating revenues in the past suggest potential volatility. Despite challenges, EBIT and EBITDA margins of 31.72% and 9.11% TTM, respectively, reflect a healthy core business performance.70
Positive
Balance Sheet
The balance sheet is solid with a healthy equity ratio of 36.68% TTM, indicating stability. The debt-to-equity ratio is low at 0.015, reflecting minimal leverage risk. Return on Equity improved significantly to 1.16% TTM, showcasing enhanced shareholder value creation. However, slight variations in assets and equity over the years suggest moderate fluctuations.75
Positive
Cash Flow
Cash flow generation has been challenging, with a negative free cash flow TTM due to high capital expenditures, impacting liquidity. However, operating cash flow to net income ratio improved to 3.45 TTM, indicating better cash conversion efficiency. The free cash flow has shown volatility over the years, reflecting potential operational risks.60
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 13.67B | 11.89B | 10.55B | 12.76B | 12.44B | 9.37B | Gross Profit |
| 3.53B | 1.85B | 738.00M | 1.93B | 2.62B | 765.00M | EBIT |
| 2.15B | 1.52B | -584.00M | 1.52B | 2.52B | 423.00M | EBITDA |
| 2.79B | 1.52B | 48.00M | 2.03B | 2.75B | 1.02B | Net Income Common Stockholders |
| 963.00M | 60.00M | -651.00M | 59.00M | 429.00M | -14.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.14B | 1.14B | 944.00M | 1.36B | 1.81B | 1.61B | Total Assets |
| 14.06B | 14.06B | 14.15B | 14.76B | 15.03B | 14.86B | Total Debt |
| 2.54B | 2.54B | 1.92B | 1.87B | 1.87B | 2.62B | Net Debt |
| 1.41B | 1.41B | 971.00M | 503.00M | 52.00M | 1.02B | Total Liabilities |
| 8.91B | 8.91B | 8.31B | 8.17B | 8.74B | 9.84B | Stockholders Equity |
| 5.16B | 5.16B | 4.25B | 5.08B | 4.67B | 3.31B |
| Cash Flow | Free Cash Flow | ||||
| 1.15B | 42.00M | -440.00M | 342.00M | 530.00M | 41.00M | Operating Cash Flow |
| 1.57B | 622.00M | 91.00M | 822.00M | 920.00M | 394.00M | Investing Cash Flow |
| -169.00M | -608.00M | -585.00M | -495.00M | 565.00M | -167.00M | Financing Cash Flow |
| -1.29B | 201.00M | 57.00M | -768.00M | -1.16B | 514.00M |
Alcoa Technical Analysis
Negative
33.25
Price Trends
35.52
Negative
38.80
Negative
37.45
Negative
Market Momentum
-1.13
Positive
46.19
Neutral
43.48
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AA, the sentiment is Negative. The current price of 33.25 is below the 20-day moving average (MA) of 33.94, below the 50-day MA of 35.52, and below the 200-day MA of 37.45, indicating a bearish trend. The MACD of -1.13 indicates Positive momentum. The RSI at 46.19 is Neutral, neither overbought nor oversold. The STOCH value of 43.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AA.
Alcoa Risk Analysis
Alcoa disclosed 30 risk factors in its most recent earnings report. Alcoa reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Alcoa Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $14.92B | 18.00 | 11.71% | 1.56% | -6.56% | -31.89% | |
72 Outperform | $29.21B | 15.80 | 9.79% | 1.67% | -11.46% | -53.33% | |
70 Outperform | $7.38B | 20.32 | 22.82% | ― | 4.51% | -2.90% | |
67 Neutral | $8.27B | 110.49 | 1.28% | 1.29% | 14.80% | 96.53% | |
61 Neutral | $1.67B | 5.57 | 64.15% | ― | 1.60% | ― | |
57 Neutral | $1.09B | 22.84 | 7.09% | 4.70% | -2.04% | -1.36% | |
47 Neutral | $2.64B | -3.85 | -29.39% | 3.32% | 2.72% | -29.67% |
* Basic Materials Sector Average
Performance Comparison
AA
Alcoa
33.25
3.03
10.03%
ATI
ATI
50.96
1.96
4.00%
CENX
Century Aluminum
19.15
7.49
64.24%
KALU
Kaiser Aluminum
67.00
-7.74
-10.36%
NUE
Nucor
130.86
-50.56
-27.87%
RS
Reliance Steel
277.62
-41.54
-13.02%
Alcoa Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: -13.99% | Next Earnings Date: Apr 16, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant revenue and profit growth. Major achievements include exceeding profitability improvement targets and effective debt reduction efforts. However, challenges such as the tight bauxite market, potential impacts from U.S. tariffs, and ongoing issues with San Ciprián operations present ongoing risks. Overall, while positive aspects outweigh the challenges, there are notable areas of concern that require attention.Highlights
Strong Financial Performance and Growth
Revenue was up 20% sequentially to $3.5 billion, with the Alumina segment's third-party revenue increasing by 45% and the Aluminum segment by 5%. Fourth-quarter net income was $202 million, up from $90 million in the prior quarter. Adjusted EBITDA increased by $222 million to $677 million.
Successful Profitability Improvement Program
Exceeding the $645 million profitability improvement target with $675 million achieved by the end of the year. Significant savings were made on raw materials and other operational improvements.
Safety and Operational Excellence
No fatalities or life-altering injuries reported in 2024, with improved key safety metrics. Nine of 11 smelters increased annual production, with five achieving annual production records.
Debt Reduction Initiatives
Started delevering the company with the repayment of $385 million of debt while maintaining quarterly dividends.
Strategic Market Positioning
Alcoa's vertically integrated operations provide a competitive advantage, allowing maneuverability in changing market and policy conditions.
Lowlights
Challenges with San Ciprián Operations
Despite progress, several key pieces need to fall in place for the long-term viability of San Ciprián. The smelter remains non-viable, with ongoing cash consumption.
Bauxite Market Tightness
The bauxite market remains tight, with prices reaching $120-$130 per tonne, impacting alumina market conditions.
Potential Impact of U.S. Tariffs
Uncertainty around new U.S. tariffs on Canadian aluminum exports could disrupt trade flows and increase costs for U.S. customers.
Kwinana Curtailment Costs
An $82 million restructuring charge for the Kwinana curtailment was recorded, with transition and holding costs slowing savings delivery.
Company Guidance
During the Alcoa Corporation's Q4 2024 earnings call, the company provided detailed guidance on various financial metrics and strategic priorities for 2025. The company reported a significant 20% increase in revenue to $3.5 billion, driven by a 45% rise in Alumina segment revenue due to higher prices and shipments, and a 5% rise in the Aluminum segment. Alcoa achieved a net income of $202 million, with earnings per share doubling to $0.76, despite a restructuring charge of $82 million. Adjusted EBITDA rose by $222 million to $677 million. Looking ahead, Alcoa expects alumina production to range between 9.5 and 9.7 million tonnes, while aluminum production is projected between 2.3 and 2.5 million tonnes. Key financial priorities include deleveraging, with a capital expenditure estimate of $700 million, of which $625 million is for sustaining and $75 million for return-seeking investments. They also highlighted the company's accomplishments, such as exceeding their $645 million profitability improvement program and reducing net debt. The company anticipates maintaining its quarterly dividend and strategically managing its portfolio to improve financial performance.Alcoa Corporate Events
Executive/Board ChangesShareholder Meetings
Alcoa Chairman Steven W. Williams to Leave Board
Neutral
Feb 21, 2025
On February 20, 2025, Steven W. Williams announced he will not seek re-election to Alcoa’s Board of Directors at the 2025 Annual Meeting, having served since 2016 and as Chairman since 2021. His departure is amicable and part of planned changes, which will see the Board reduce to eleven members, as he has been instrumental in Alcoa’s transformation into a leading aluminum company.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.