After The Bell: Alcoa Earnings on Tap
Will higher energy costs offset a rise in aluminum prices?
Market Update
Aluminum giant Alcoa announces its first-quarter earnings after market close Monday, an event often considered as the unofficial kick-off to earnings season.
Investors will key in on how strong aluminum demand and prices, which may result in robust revenue, is offsetting rising energy costs. A turnaround in the businesses of key Alcoa clients, such as automakers and aircraft producers, is also expected to boost revenue, and investors may listen for management comments about whether rebuilding efforts in Japan after last month's earthquake could help sales going forward.
A consensus of Wall Street estimates pegs Alcoa's first-quarter earnings per share at $0.27, compared with $0.10 in the same quarter last year. But a steady rise in the stock--Alcoa is up about 10% in the past three months and about 40% in the trailing six-month period--could mean that the share price already reflects the improved picture. Indeed, at current levels, the stock looks roughly fairly valued compared with Morningstar analyst Bridget Freas' $17 fair value estimate.
As the M&A scene heats up in the resource industry, analysts may also look for insights from the company regarding acquisitions--after the firm completed the buyout of the aerospace fastener business of TransDigm Group last month.