On Apr 10, we issued an updated research report on U.S.
). While strong momentum across automotive and aerospace markets
remains encouraging, the company is still exposed to a weak
aluminum price environment.
Alcoa raked in a loss in first-quarter 2014, reported on Apr 8,
on sizable restructuring charges. But its adjusted earnings
topped the Zacks Consensus Estimate. Sales fell on lower aluminum
pricing and missed expectations. The company continues to expect
aluminum demand to rise 7% this year.
Alcoa is seeing strength in automotive and aerospace markets. The
automotive industry is expected to offer significant opportunity
this year and beyond. Alcoa sees meaningful growth of aluminum
use in the auto sector in 2014 as automakers increasingly look
for the metal as a cost-effective mean to boost performance,
safety, durability and fuel efficiency of their vehicles.
Alcoa, which makes aircraft fasteners, is also witnessing healthy
airline fundamentals. It has raised its growth expectations for
the aerospace market to 8%-9% from 7%-8% for 2014 factoring in
strong demand for both large commercial aircraft and regional
jets and sustained growth in the business jet market.
Moreover, Alcoa remains committed to move down its cost curves in
its upstream businesses and drive profitability in its downstream
business. The company has taken up a number of restructuring
measures (including closure of smelters) and is aggressively
pursuing cost-cutting actions. Alcoa, during the first quarter,
announced three smelting capacity reductions.
However, Alcoa continues to grapple with weak aluminum pricing.
Realized aluminum prices fell 8% in the first quarter, dragging
down the company's sales in the process. Aluminum prices remain
under pressure given the oversupply of the metal in the
In addition, Alcoa is still witnessing softness across building
and construction and commercial transportation markets in Europe.
It expects weakness in non-residential building and construction
market to persist in Europe and expects a 2%-3% decline this
year. The company also expects weak demand in the industrial gas
Key Picks from the Sector
Other mining companies worth considering include
General Moly, Inc.
Golden Minerals Company
Platinum Group Metals Ltd.
). While General Moly retains a Zacks Rank #1 (Strong Buy), both
Golden Minerals and Platinum Group sport a Zacks Rank #2
ALCOA INC (AA): Free Stock Analysis Report
GOLDEN MINERALS (AUMN): Free Stock Analysis
GENERAL MOLY IN (GMO): Free Stock Analysis
PLATINUM GROUP (PLG): Free Stock Analysis
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