Moments ago Alcoa reported adjusted earnings (because the unadjusted earnings were a disaster) of $76 million, or $0.07, on consensus expectations of a $0.06 print. In other words, a beat. So just how did the company beat its forecast?
Here's how.
Presenting the company's Q2 EPS consensus forecast over time in the short term:
[3]
And over the longer-term:
[4]
Summarizing the above:
- A week ago AA was expected to make over $0.07 (or today's result would have been a miss)
- A month ago: over $0.10
- In January: $0.17
- Just over a year ago: $0.30
- In January 2011: Q2 2013 EPS was supposed to be almost $0.70 cents
So: from January 2011 to today, the company's "consensus" EPS forecast was revised from just under 70 cents to $0.06 cents. But hey: at least it "beat".
By the way, here is why the EPS number is absolutely meaningless: it "excludes" $244 million in restructuring charges - something which makes a complete mockery of both an apples to apples comparison, and also the company's tax rate. Of course, not excluding the restructuring charge from Net Income would have meant a $148 million loss. But at least Alcoa provisioned $21 million in income taxes in Q2...
[5]
As for what actually mattered, here are the highlights:
- Revenue of $5.849 billion, down 1.9% Y/Y
- CapEx $286 million, down 1.7% Y/Y
- Free Cash Flow $228 million, down 7.3% Y/Y
But at least the company still sees a stable and growing China, expecting Chinese aluminum demand to rise 11% in 2013 versus 9% in 2012. Well, it's not like China is undergoing an unprecedented, historic deleveraging or anything so why not...