) is set to release its fourth-quarter 2013 results after the
closing gong on Jan 9.
In the last quarter, the New York-based company delivered an 83%
positive earnings surprise riding on productivity gains, strong
demand from auto makers and cost-cutting measures.
While many may think that Alcoa is no longer a major earnings
season bellwether following its exclusion from the Dow Jones
Industrial Average last year, its results will put a spotlight on
demand trend for aluminum across a gamut of industries, which is
closely linked to levels of economic activity.
Alcoa is also expected to provide some color on demand for the
metal across end-markets for 2014 in its fourth quarter
commentary. Let's see how things are shaping up for this
Factors to Consider this Quarter
While Alcoa is seeing strength across aerospace and auto markets
where demand for aluminum remains healthy, it is expected to face
sustained pricing pressure in the fourth quarter. Alcoa has taken
up a number of restructuring measures (including closure of
smelters) and is aggressively pursuing cost-cutting actions amid
a weak price environment.
Alcoa is grappling with weak aluminum pricing. London Metal
Exchange (LME) cash price fell 7% year over year in the third
quarter, hurting the company's sales in the process. Lower
pricing is expected to continue to weigh on its sales in the
Moreover, Alcoa is expected to see continued softness in
non-residential construction market in Europe in the December
quarter. Demand for defense spare parts and industrial gas
turbine is also expected to be sluggish. Pricing across Europe
and China is expected to be weak while energy costs will be
higher in Australia.
Our proven model does not conclusively show that Alcoa is likely
to beat the Zacks Consensus Estimate in the fourth quarter. That
is because a stock needs to have both a positive
(Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for
this to happen. That is not the case here, as you will see below.
ESP for Alcoa is 0.00%. This is because both the Most Accurate
Estimate and the Zacks Consensus Estimate are pegged at 6 cents.
Zacks Rank #3 (Hold):
Alcoa's Zacks Rank #3 lowers the predictive power of ESP. The
Zacks Rank #3 when combined with an ESP of 0.00% makes surprise
prediction difficult. We caution against stocks with Zacks Ranks
#4 and #5 (Sell rated stocks) going into the earnings
announcement, especially when the company is seeing negative
estimate revisions momentum.
Other Stocks to Consider
Here are some other mining companies you may want to consider
as our model shows they have the right combination of elements to
post an earnings beat this quarter:
Hecla Mining Co.
) has earnings ESP of +50.00% and carries a Zacks Rank #2 (Buy).
ALCOA INC (AA): Free Stock Analysis Report
BUENAVENTUR-ADR (BVN): Free Stock Analysis
HECLA MINING (HL): Free Stock Analysis Report
PRETIUM RES INC (PVG): Free Stock Analysis
To read this article on Zacks.com click here.
Compania de Minas Buenaventura S.A.A.
) has earnings ESP of +39.13% and holds a Zacks Rank #3 (Hold).
Pretium Resources Inc.
) has earnings ESP of +25.00% and carries a Zacks Rank #3