Alcoa Inc. (
) shares are trading down nearly 2 percent ahead of the company's
first-quarter 2012 report, generally regarded as the unofficial
kickoff to earnings season. The figures are expected out after the
market closes Tuesday.
The Street is looking for Alcoa to produce a loss of 4 cents per
share on revenue of $5.77 billion. During the same quarter last
year, Alcoa reported earnings of 28 cents per share and revenue of
$5.96 billion. Over the last six quarters, Alcoa has managed to
miss Street expectations by an average of 21 percent, tipped off
with its second-quarter report last year.
In April, Alcoa said
it was cutting alumina production
by 390,000 metric tons, allowing production to come more in-line
with smelter curtailments.
Through the quarter, Alcoa shares gained 16.2 percent to $10.02 at
the end of March. This is a nice pop after Alcoa finished 43
percent lower in 2011. Over the last 52-week time frame, Alcoa
shares have traded within a range of $8.45 to $18.19.
Analysts are fairly even on the prospects for Alcoa over the next
year, with eight having a Buy rating, 10 at Hold, and three with a
Sell-equivalent call on the stock. The analyst price target average
is $11.75, ranging from $8 to $18.
- Goldman Sachs sees a loss of 3 cents per share, which is
ahead of the market. The firm is focusing its attention on the
slowdown in Europe, where Alcoa derives about 20 percent of its
total top-line results. Goldman sees uncertainty and slow demand
in Europe as well as low aluminum prices more than offsetting any
positive sentiment with Alcoa's position in the aerospace
industry as well as aluminum-alumina price decoupling.
The firm has a Neutral rating and $11 target on the shares.
- Deutsche Bank sees Alcoa issuing a loss of 5 cents per share
in the quarter. Earnings will be negatively impacted by $30
million in raw material and maintenance expenses in alumina, $10
million in foreign exchange, and $25 million in energy-related
costs in Primary metals.
The firm commented: "At 1Q12E EBITDA rates and without a
significant recovery in aluminum prices, we believe Alcoa may
resort to ~6% equity issuance in 2012 to fund a $650m pension
gap, otherwise leverage will rise." Aluminum pricing in the
quarter should come in at $1.12 per pound, which is a one cent
increase in the benchmark LME price more than offset by weaker
permia of 14 cents per pound.
Deutsche expects Alcoa to provide an update on recent capacity
cuts: "While 90k ton cut in Spanish smelters scheduled by 1H12,
Union pressure has post-poned 150k ton Italian smelter cuts until
end-2012. In addition, Alcoa has put its 190k tons Point Henry
(Australia) smelter under review on rising costs/ strong
Stay tuned to StreetInsider.com's
section to see our analysis of the highly-anticipated quarterly
results within seconds of their release. You can also check out
Alcoa's past performance at Streetinsider's
Alcoa's Income Statement