This global aluminum company reported a $0.39 per share loss for its fourth quarter. But after nonrecurring items were excluded, EPS was a positive $0.04 per share, two cents better than expected. The company is attracting hedge fund interest, and two analysts have increased their earnings estimates for 2016 in the past 30 days.
Alcoa Aluminum (AA)
From Sound Advice
Alcoa Aluminum (AA) has been crushed along with other commodity stocks. As expected, AA reported a loss for the fourth quarter.
Alcoa is a fully integrated aluminum producer, which means it operates in all phases of production, starting with its mining operations (upstream) and ending with its finished products (downstream). Alcoa’s full integration gives it control over the supply chain, and makes it possible to enjoy larger profits from its downstream operations when aluminum prices are low.
In the first half of this year, Alcoa will be splitting its upstream and downstream operations into two separate companies. Management is making this move to unlock value, and we believe it is certain to do just that. Evidently the Elliott Management Corp agrees. The value-oriented hedge fund increased its stake in AA. (WSBI Editor’s Note: Elliott raised its holdings in Alcoa to 7.4% in January.)
Gray Cardiff, Sound Advice, www.soundadvice-newsletter.com, 800-825-7007, February 2016