Alcoa headed for another earnings beat as aluminium prices skyrocket – Stock Market News
![](https://www.xm.com/wp-content/uploads/2021/10/Alcoa-perf.png)
Metal and other commodity prices have been rallying since late spring of 2020 when economies around the world started to emerge from the first Covid lockdown. Aside from the reopening effect, the global shift towards green energy has also been boosting demand for many metals such as aluminium, which are used extensively in many components, including batteries.
But strong demand is not the only thing that’s driving the price of aluminium and other metals sharply higher as the sector has not been immune to the global supply crunch. Power outages in China have forced many smelters in the country to ration electricity, leading them to cut production. Even in Europe, where energy costs are spiraling higher, some producers have had to reduce output due to electricity providers being unable to meet demand. Aluminium prices have surged more than 50% in the year-to-date, jumping by 7% so far in October alone.
![](https://www.xm.com/wp-content/uploads/2021/10/Aluminium.png)
For Alcoa, this can only be a good thing as the United States is unlikely to experience an energy crisis of its own, therefore, it can boost production at its own facilities, not just at home but also in South America as well. Furthermore, Congress is close to finalizing the $1 trillion infrastructure bill, which if passed, will unleash billions of dollars for rebuilding highways, railroads and bridges across the US, benefiting domestic steelmakers.
All this bodes well not just for the last quarter, but also for upcoming quarters. In the three months to September, Alcoa is expected to have earned $2.955 billion in revenue, which would represent an almost 25% increase on the same quarter in 2020, making it the third quarter in a row of double-digit annual growth. Its earnings per share are forecast at $1.89 according to Refinitiv IBES estimates. This would be up 5.2% from a year ago and up 26.8% from the prior quarter.
![](https://www.xm.com/wp-content/uploads/2021/10/Alcoa.png)
Alcoa’s share price has rallied more than 100% in 2021 and further gains could be in store if there are positive surprises in the earnings release. The stock is currently trading around $48.0. Better-than-expected results could push the price up towards the September top of $52.45, which was a three-year high. The 161.8% Fibonacci extension of the May-July downleg at $52.79 is not far above this peak, making the region a strong resistance point. However, if cleared, the 200% Fibonacci of $57.99 would be the next target for the bulls.
To the downside, the 50-day moving average (MA), currently at $45.74, is likely to defend the price in case there is a selloff from worse-than-expected earnings. A drop below the 50-day MA could see the stock initially stalling at the 78.6% Fibonacci of $41.48 before heading towards the August trough of $36.61
![](https://www.xm.com/wp-content/uploads/2021/10/Alcoa-earnings.png)
Analysts remain optimistic about the stock, maintaining their ‘Buy’ recommendation and setting a median price target of $56.0. The Company’s price/earnings (PE) ratio, however, is somewhat above the industry average. Alcoa has a forward PE multiple of 7.52 compared to the industry median of 3.36, although these are far from levels that would be considered as overvalued and in fact, the stock is likely undervalued.
Nevertheless, there are some risks for Alcoa from the earnings call on Wednesday. Investors will be looking to see whether the wider supply constraints in the economy are pushing up costs for the Company. Any guidance for the next quarter about revenue or the demand outlook in general will be important too. Specifically, the construction industry in the US is still recovering so although on the one hand there is plenty of room for further growth, labour shortages are significantly curbing activity.
Finally, President Biden’s infrastructure bill has yet to complete its passage through Congress so any surprises on that front could also pose a negative risk for the stock.免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料,僅適用於教育/資訊類用途,不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議,或是交易價格紀錄,或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容,包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接,皆爲‘按原狀’,並作爲一般市場評論所提供,而非投資建議。請理解和接受,所有被歸類為投資研究範圍的相關内容,並非爲了促進投資研究獨立性,而根據法律要求所編寫,而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊,相關詳情請點擊 這裡查看。