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A Slight Discrepancy In Alumnium Inventories
On one hand you have management disclosures like this:
"In the second half of 2009, there are signs that key markets the Company operates in are stabilizing. Due to low inventories at distributors and rising shipments, regional premiums are improving and global aluminum consumption is expected to increase 11% in the second half of 2009."
On the other hand, you have absolute, unprecednted record amounts of aluminum just sitting idle, doing nothing, waiting for the day they get converted into that Boeing 787 fuselage (some time in 2094) and in the meantime just checking their email to see when those 10 new Amazon Kindles they ordered will finally arive, courtesy of a newly invigorated FedEx (we jest, aluminum does not read... and until a year ago, neither did the average American...some things sure change).
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but..."75% of LME is contractually bound" CEO
Could you tell us what is in other income..."$58m is gain, the largest of the items" next question please
Hey ZH I protest, they beat their vastly downwardly revised earnings estimate, it's time to pop that Champagne and party like it's 2005 baby!
Next thing you know you'll be implying they monkeyed around with their books;)
Does Boeing know that they're going "heavy metal" on the B-787?....;>)
"Boeing states that it will be more fuel-efficient than earlier Boeing airliners and will be the first major airliner to use composite materials for most of its construction.[3]"
they are counting on zh to start a new line of aluminum foil hats because all the naysayers are nuts.
it's different this time, you know.
DH - AA hopes that we have progressed from hats to window & wall lining.
with the increased terror threats going on now, AA's soon to be released research will show that using duct tape to adhere aluminum to windows will help keep out anthrax and other biomass weapons.
Is Tom Ridge on their board? if not, he is their go to guy.
maybe Homeland Security can replace code red with code silver?
this is about the 50th time i've seen conflicting data
someone is lying to us .......
i'm sure SPY has been up more than 50 days since march 6th ;)
I am sure that with the dearth of aluminum manufacturing capacity in China that AA sees nothing but happy days before them.
CNBC News Bulletin....
The recent massive increase in Kool-Aid drinking from aluminum cans by the general public is behind the better than expected earnings report.
Alcoa released a statement thanking "CNBC for doing their part during this time of national emergency to convince people it's their patriotic duty to drink 4 cans a day to keep America free."
And buy shares of CIT with both fists, "IT'S A NO BRAINER!!!!!!"
CIT now ships aluminum certificates with every share purchased
With instructions in Mandarin on how to set up shipping from a Chinese pig farming operation.
let's not leave out our Icelandic friends. isn't the AA plant there like, 90% of their new gdp?
Joe Six Pack is downgrading from bottled beer to cans.
indeed. 787 will be mainly composites (plastic) not aluminum.
clearly biased this article is; charted in a log scale this would all make sense.
Speaking of Kool-Aid there is this
Oct. 7, 2009, 6:04 p.m. EDT
S&P Equity Research late Wednesday said it was raising its 12-month price target on S&P's 500 index /quotes/comstock/21z!i1:in\x (SPX 1,058, +2.85, +0.27%) by 50 points to 1,150 and is advising investors to buy more global stocks. Investors should reduce their cash exposure by 5 percentage points, to a benchmark 10% allocation, and add those savings to U.S. and non-U.S. stocks.
http://www.marketwatch.com/story/sp-equity-lifts-target-on-sp-500-index-...
As Karl Denninger so aptly stated in a post of his today, "You don't have a 9% increase in gross sales on an 18% increase in prices".
That about says it for ALCOA's increased shipments!
Well, it depends on the length of contracts. If you don't sell at spot prices for longer contracts, you could very well see a 9% increase in gross sales at 18% increase in spot prices.
The aluminum is going into aluminum baseball bats for home defense. Robberies are way up.
So I guess the "restocking" actually took place early this year. Hilarious. I guess if we're looking for an inventory bounce, we shouldn't count on the aluminum industry.
plenty of speculators and speculating stockpilers out there... AA must supply the LME's speculative stocks. they must. must!
from a YOY perspective
q3 revenues (- 40%)
q3 eps (-90%)
q3 tonnage (-9%)
share price October 8 2008 $14.71
share price October 7, 2009 $14.20 (after hours $14.99)
The comparison looks even more ridiculous when you add the facts that during that time period AA diluted shareholders by issuing 150 million shares of common stock at $5.25/share, $.28 above the 52 week low and $500 million of convertible bonds at the same time. In the last 12 months they've also cut the quarterly dividend from $.17 to $.03 per share.
Thanks for this perspective. I was thinking this without having the hard numbers. This "market" is UFB.
CD - Must be those 24oz specials sitting next to the tall boy bear cans at the gas n go.
HEHEHE - And don't forget FNM & FRE! Boooya! (cue rapid focus in/out on the 1.3 second interval - Rotate red light).
Miles Kendig, you have a wonderfully sick mind. I respect that.
Where are they hiding it all?? Maybe they can gold plate it and coin it into Eagles to help the mint out a little.
If Alcoa were to average 15 cents (4x the best quarter they have had in the past year) in earnings per quarter for next year that would give them 60 cents in forward earnings (once again, no way do they manage this). 15/.6 is 25x p/e. Who would possibly buy this stock.
Hope has deleterious effects on logic and math skills. When the music stops, there is gonna be a lot of pent up anger from folks who were humming along with the tune...
25 x pe is the new normal.
for banks, 80 x pe is the new normal.
who needs the E when you have the promise of exponential growth as big negatives flip to small positives (or just smaller negatives). And if things stay negative for too long then they'll just fire everyone, burn off inventories. This elusive beast named the economy doesn't need you or me or even profits...just sell dollars and it'll all be great.
Maybe the "E" in P/E now stands for Extra shares.
Seems dilution is the only product any company can sell anymore. Notice AAI dumped a load in the market on declining load factors. There is no revenue from conducting traditional business anymore, just selling more stock. As soon as the real economy gains any traction at all, oil will shoot off towards $300 a barrel and all airlines will have to be rescued by the fed as a matter of national security. Oil trading at $72 with this low demand makes that a sure bet.
Much of AA's "profit" came from faster than expected dumpstering of employees, nothing else. I still do not understand these investors who are pegging increasingly high P/E ratios on companies that are shrinking and have no prospects of ever going back to the size they were. They all have huge operational leverage overhangs that will turn into legacy carcasses.
I expect a follow on offering from them to show up in the market within a week or two....after some GS upgrades of course.
A robot.
so far it is pent up anger from the bears... and how do you know they can not make 1.20 next year? As of 3.59 everybody here thought that AA is going to report negative earnings and go down. They had positive and went up. So why would someone listen to what you are saying?
Check out the income statement dood. Even with one of the sharpest steepest commodity price collapses ever ever, YoY AA's cost of revenue dropped 30% where their revenues dropped 40%. And allegedly their inventories are down so they didn't produce more than they sold, right? Point is there are crazy fixed costs in making aluminum. Profits are driven by top line growth, and AA's revenue would have to increase 50% from here and have it stay there for four straight quarters to even approach $1.20 EPS*.
*share count 974 mln, 9-30-08 for comps: $268 mln net income on $7bln revenues
http://www.google.com/finance?q=NYSE:AA&fstype=ii
i liked the "dood" part... but... you dod not get my point. Let me try again. My point was that as of 3.59pm today all you smart people were suuuuuure that AA is gonna have negative earnings. And i am suuuuure you had all the facts to back it up. Well, did not work that way.
Once more with all "all you people" crap. please define and provice examples of unitary thinking here.. fish fooood
Not sure if you'll see this :-P I can only speak for myself, but I research these things pretty thoroughlly and was absolutely expecting a great (vis-a-vis expectations) quarter and improved outlook.
One of the hardest things to do in investing is to harmonize a long term fundamental view with an understanding of whats driving the sometimes massive short-term fluctuations. Your point in that regard is well taken, anyone trading AA on a fundamentally bearish view lost out and likely has more pain to come.
better than expected, blows analysts
http://www.boeing.com/commercial/aeromagazine/articles/qtr_4_06/article_...
20% of the 787 will be aluminum...maybe they plan on building 5 times as many, which will suck up a lot of aluminum!
AA had a $123m gain offset to costs and a tax credit. Net of items EPS -0.08 about in line. The street wasn't far off the bottom line beat was on items putting aside the price gain on LME. Another high quality EPS quarter
King dollar Kudlow asked Doug Kass about AA's $1billion in cash, Kass replied "but AA has $11billion in debt". I guess no dividend raise?
I love the ramp up at the end of the day today on AA while the SEC was looking the other way. :
http://www.nakedhedgefund.com/finance/conspiracy/loose-lips-at-alcoa/
That ramp was the entire S&P, not just Alcoa.
And why not gamble? When in the last 7 months has it not paid off.
How do they transport the metal?
http://railfax.transmatch.com/
There isn't one commodity(gold=money) that is doing well. Alcoa is just pulling off what otheres did in q2. Fire, slow production, fake the numbers and claim victory. And when next quarter shows up-major FAIL.
Look at Baltic Dry. Look at PPI. Look at manufacturing. What is Alcoa making to cover the shortfall? Diet Coke cans?
Good info guys. 12 cent dividend on a developed company? Someone has flushed the toilet on this one. I read their revenues were down 30% or more? Only an idiot would buy this, as they go broke on the next dip in the economy.
I predict the party on the S&P will not end until 2009 4Q/year end earnings come out in 2010. S&P will bounce around its range until then - no corrections until then, and it may well be that QE continuing will keep the party raging for the first six months of 2010. Dollar down trend is a powerful headwind, I think. Trading on the inevitable "beat estimates" and "better than expected" will be profitable in the upcoming weeks I think. So go long, and don't fight the trend. Fundamentals don't mean jack.
Massive reset button has been pushed, but there is still overwhelming investor sentiment that something will come along to drive this economy back up to 2006 levels. That, combined with QE, declining dollar, "upbeat" selling media drumbeat, and need of money managers to catch their fair share of the equities market increase before year end, will keep this party rolling for now.
The quest for return in a relative & comparative world as it races itself to the bottom. Indeed.
Ned,
Right you are, I think...
Interesting chart I found on the old fiendbear.com site has a comparison of the Nikkei and the S&P with a ten year lag.
Spooky how correlated they are... in a perfect world we would
hope that doing the same things to cope with disaster would
have the same results; just ten 'lost' years of no growth.
Difference is in the savings of the two populations.
But look at the rally they predict!
link: http://www.resourceinvestor.com/News/2009/9/Pages/Comparing-the-SP-and-t...
rc