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Alcoa Earnings Beat Consensus By $0.02, Revenues Miss Expectations By $100 Million, Stock Opens Down 1% After Hours
- EPS reports adjusted $0.21 on expectation of $0.19
- Revenues of $5.65 billion miss expectations of $5.75 billion.
- Sees global aluminium growth rate 12% for 2011
- Sees global aluminium demand doubling by 2020
- Q4 Adjusted EBITDA of $782 million, 13.8% margin
- Q4 CapEx: $365 million
- Cash on hand of USD 1.5bln at quarter end
- Improved earnings were driven by higher pricing and continued strengthening in most markets and improved productivity
- Quarterly results were offset somewhat by a weaker USD and higher energy and raw material costs
- CEO says expects Chinese demand to slow.
- Of the 4 segments (Alumina, Primary Metals, Flat-Rolled Products, Engineered Products and Solutions), only Primary Metals posted a sequential increase in ATOI in Q4. The reason: "Improved LME prices,
volume and productivity were partially offset by unfavorable currency
and cost increases in energy and carbon product prices. Primary
production for the quarter increased to 913,000 metric tons, with
buy/resell activity totaling 70,000 metric tons. The Avilés smelter
returned to full production this quarter. Adjusted EBITDA per ton
improved to $436 in the quarter, better than the ten-year historical
average."
Full press release.
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will be up 10% AH
So far down 1%
Non ferrous metals are up 11% this last Q.
Also, wages in the metal sector in the EU are up 4,7% since 1 jan.
This is killing the metal industry as we speak.
And for Alcoa, hard times are coming because all wholesalers have filled their warehouses to the roof on expected commodity spikes.
A second problem is that in december, production plummeted in the EU.
Another one to watch is Arcelor Mittal, they are kicking up production at raiser sharp margins to take market share at whatever the cost because volume is the only thing that can keep their furnaces working.
SO: higher commodity prices & lower margins on steel rolls.
Hard to argue the growth story now with aluminum demand up so much. And, even more important, the outlook for the year is very strong. This is an excellent report and gives us an early insight into the strength the economy witnessed in late 2010 and how it will continue into 2011.
Excellent news. That means, after tomorrow's POMO (last POMO on current schedule), the Fed will stop monetizing debt.
Irrelevant. POMO is just stablizing the currency market. With or without POMO, the market is incredibly undervalued.
Please tell me what you are smoking so I can head out in this wintry weather to also have some for the BCS game.
http://dshort.com/articles/three-valuation-indicators.html
Foward earnings are being vastly underestimated. Coupled with most earnings estimates are agnostic to money supply changes makes these metrics obsolute. The fair value on the S&P is 1588.
All metrics are meaningless except the ones you decide to use to formulate S&P fair value of 1,588.
I respect many metrics. Abby Joseph Cohen tweaked her valuation model a couple of years back and has been spot on of late. Her metrics should not be ingnored. My metrics had targeted the SPX for January 2011 at 1250 two years ago when it was trading at 850.
This Abby Joseph Cohen?
http://financegourmet.com/blog/news/abby-joseph-cohen-track-record-accur...
I said she tweaked her model two years ago. She has been spot on since them.
With a bullish MO over the course of her career how can she not be correct over the past 2 years.
"Tweaked" after she ended up being off 100% in her market forecast?
Point well take Tyler. But there is no denying Cohen is a master at implementing Bayesian priors into her model. Hard to argue her pinpoint accuracy the last couple of years and the liklihood of this accuracy to continue going forward.
inkt"2002" i take it that is the year you were born?
Actually it is not hard to argue it at all
Aluminium growth rate has the highest correlation to GDP growth rate than any other entity. Would not be surpised to see a 4.5 to 5% print on GDP this year, which would make the SPX fair value 1588.
You might be correct. I'm not so bullish on my SPX number but do think 1400 is a given this year. This report is showing strong demand and, as you stated, that will translate nicely to GDP.
....you are spot on the 14 handle...... as long as the financials can keep the mark to market con going for another 11 months, 3 weeks. I'd do an all-in if I were you, amigo.
I have not run the numbers but I do not recall there being a term "Dr. Aluminum".
@wanger Go back to grading papers. Top line is harder to cook than EPS. AA admits China is slowing and we're supposed to believe that India and Vietnam will more than pick up the slack? Only in Cramerica.
Don't be a knob, Harry. Equity markets are going to have to face up to rising interest rates over the next few years, that will compress rather than expand PE multiples. Its been so long since equities faced a flattening yield curve via the short end, let alone inverted, that you've forgotten the impact on equities.
"Alcoa contributed these strong numbers to consumers buying aluminum foil in bulk, for use as barter during the coming Armageddon."
-MarketWatch
buy the fucking dip, aa is one of the biggest polluters on this planet
see you below $12 Harry...
Way to go AA. That Aluminum on my Macbook pro is a beautiful thing. Keep up the great work
I know it's earning season and all but did anyone see this? What do we make of it?
http://gata.org/node/9496
belogical - very interesting. I also liked the Ron Paul statement. IT's time the FED had some real oversight.
Good find. Wonder what will happen.
Bulls are even on Zerohedge now...
AA is going do triple the prices & have double the demand in 2020?
Whats the PE on AA now?
And just think if everyone had the power to look and predict TEN years into the future....
Shame Greenpants and ZimBen can't even see in front of their noses
Looking at a forward p/e around 14. With growth at 12% this year and doubling by 2020, I'd say this is an excellent long term play right here.
I'll give you its better than paper dollars but thats it. The demand NOW is due to HUGE debt & money printing, if you want demand to double by 2020 whats your target for the deficit & printing then?
By 2020 grocery bills will be $1500 per week IF demand doubles for aluminum in 2020.
Won't be good for the economy or society but for the select few.
Long term play... On a long enough time scale the survival rate for everyone is ZERO
Linear extrapolation at its finest
I like AA but I think I'll wait for the 50% off sale.
Sell all gold bullion. Buy aluminum siding in bulk.
i am going to start crushing my beer cans and selling them to wanger...
LOL...here in rural Thailand we have a guy who comes by once a month on a motorcycle with sidecar and buys all our aluminium, glass, paper and plastic.....and the prices he pays are going up!
Implies annual growth of 6.65% from 2012-2020. Not gonna happen...
Double? What planet are they talking about? Oil production won´t be enough for once.
Maybe they expect aliens to deliver future resources so the exponential curve can continue straight up to infinity.
based on the quadrupling of the Fed balance sheet. oops, already happened.
To all the HarryW-type bulls - this is a banana peel market. AAPL is about the only stock with any value I can see- and it's hardly cheap. If you're the Feds, you should care more about remaining a going concern rather than whether the ES is at one level or down 90% eventually. That's in essence the decision the Japanese authorities have been making. If it takes terrifying the sheeple to allot capital to stocks w q and CAPE at near record levels, that leaves bonds as one alternative. And if matters go the other way w Treasury prices collapsing, all you need is gold/Ag etc.
L-L-Looks like the e-e-economy is growing. Th-th-th-th-th-that means the marketttts s-s-should drop for no r-reason.
Woah, AA beating that much bodes well IMO for the overall strength of what Q4 earnings will bring. A lil' icing is their strong guidance too. Q4 could prove to be the best in 2 years. Must remind self----buy.more.dips.
Alcoa.. wow. I used to work at one of their plants after I got out of college and looking for a job in my field. If you have a brain in your head, you would drop any investments with them like they were herpes. The unions run ALCOA, plain and simple. The unions have STOLEN pensions and PROMISED packages to management for years and they strike like a bunch of pussy, fuck-face, whine-ass, sissy-mary's when they don't get what they want, see 1993ish strike in Massena, NY. They set up road blocks and set fire to tires. Some even brought rifles and were firing.
So now ALCOA pussied out and won't grow a fucking pair enough to tell the unions, which analy rape ALCOA on a regular basis and even loss prevention is in on it, to sit on it and rotate. So YOU and I are stuck with higher prices because the guys in the pot rooms think a laborious job such as theirs is worth 75k a year +OT, paid vacations and other crazy benefits. It takes about .001% of brain power to learn the job and nothing short of practice to get it right. Any one who actually comes in, learns the job and finishes their job in the 8 hours period is actually shunned and , for lack of a better term, THREATENED to slow it down so he doesn't make the old fuckers look bad so the old fuckers can continue their thievery.
Derivatives are off-book and FASB is suspended. I don't trust any quarterly earnings reports.
I also assume all US mega corporations, such as Alcoa, are "guided" by officials of the US govt. I'm trying to think...of a US agency...that needs lots of aluminum...hmmm.
How many times did they revise down this past week/month?
Alcoa expansion plans are stalled in Iceland and the geothermal plant is offline until 2012 which was just purchased by Australia's Wasabi Energy.
http://thebull.com.au/articles/a/16796-australia%27s-wasabi-energy-buys-...
China showing interest...
http://www.savingiceland.org/tag/husavik-energy/
...telling the American ambassador in Iceland how they are “bending all the rules, just for this”... (enviromental concerns)
http://www.savingiceland.org/tag/alcoa/
Aluminium smelting is the most important power-intensive industry in Iceland. There are currently three plants in operation, with one under construction and two in the planning stage.
http://en.wikipedia.org/wiki/Economy_of_Iceland
If Alcoa's plans to expand are realized and they can keep China at bay, expect production to increase out of the area in 2 years boosting profits but filling some supply needs. If there is a demand gap in 2 years... (don't hold your breath on GM demand though)