Alcoa shines a hopeful light on the economy
The aluminum maker's strong results -- and its forecast for good growth ahead -- should hearten bulls.
New York-based Alcoa has its fingers in many different pies, such as aerospace, automotive, packaging and construction, which makes it a good proxy for the overall economy. And the company continues to expect that global demand for aluminum will grow 7% in 2013, helped by a 9%-10% increase in aerospace and a single-digit rise across the rest of the sectors it serves.
Even better news for Alcoa is its forecast that its surplus will decline to 155,000 metric tons in the quarter, down from 535,000 metric tons in the fourth quarter. That should help firm up aluminum prices, which of course will benefit Alcoa's bottom line. Prices for the metal on the London Metal Exchange have fallen 9.2% this year. My colleague Charley Blaine took a closer look at Alcoa's numbers yesterday.
Analysts are expecting aluminum demand from the automotive and aerospace sectors to remain robust. A likely rise in commercial construction will also help.
Alcoa reported net income in the last quarter of $149 million, or 13 cents a share, versus $94 million, or 9 cents, a year earlier. Excluding one-time items, profit was 11 cents, surpassing the 8-cent average estimate of analysts surveyed by Bloomberg. Revenue slipped 2.9% to $5.83 billion because of fewer production days. That lagged analysts' estimates of $5.88 billion.
"It's a solid, good quarter," said Alcoa CEO Klaus Kleinfeld, in an interview with CNBC.
Wall Street expects the good times to continue for Alcoa. The average 52-week price target on the stock is $9.73, about 16% above where it currently trades.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Copyright © 2014 Microsoft. All rights reserved.
[BRIEFING.COM] The stock market finished the Tuesday session on an upbeat note with small caps pacing the rally. The Russell 2000 advanced 0.8%, while the S&P 500 added 0.5% with eight sectors ending in the green.
Although geopolitical concerns factored into the modest retreat on Monday, the worries were cast aside today after separatist forces in eastern Ukraine handed over black boxes from MH17 to Malaysian authorities and Secretary of State John Kerry began working on brokering a ... More
More Market News
The company plans to close stores and lay off employees, and says it needs to make some deeper changes.
MUST-SEE ON MSN
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'