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Big Beat for Alcoa Earnings, Sales - Analyst Blog

For the second straight quarter, aluminum giant Alcoa ( AA ) has wowed investors with a very big earnings beat. Importantly, in the company's fiscal Q2 reported after the bell Tuesday, Alcoa also posted an impressive beat in revenues: $5.84 billion came in for the quarter -- much better than the $5.51 expected -- on earnings of 18 cents per share, topping the Zacks Consensus Estimate of 13 cents for a 38.5% positive surprise.

There is much to like about this report: Alcoa's sales were 7% higher than last quarter, global aluminum demand maintained a 7% growth projection for 2014, and its Engineered Products and Solutions set all-time records in both after-tax operating income ($204M) and recorded adjusted EBITDA margin (23.1%).

As one might expect, Alcoa shares shot up immediately in the after-market, jumping 3% (the stock has tempered a bit since) on a modestly positive regular trading day. This follows what has been an excellent 2014 overall so far: AA shares are up nearly 40% year to date. Alcoa is up a full 90% since this time last year. Not bad for a Dow stalwart unceremoniously booted off the index in September 2013.

Alcoa also recently purchased Firth Rixson for just under $3 billion, and there is some good news here for Alcoa investors, as well: aerospace demand growth guidance is up 8-9% for 2014; it would seem a good time to have aquired a jet engine component maker.

Typically, analyst estimate revisions have been all over the place prior to the earnings release: 4 upward revisions, 2 downward revisions, for Alcoa's Q2 and fiscal 2014. Prior to earnings, Alcoa carried a Zacks Rank #3 (Hold).

Although Alcoa has been known to "kick off" earnings season each quarter, it had been quite awhile since it's been considered a "sexy" stock. But with performances like these of the past two quarters, investors may wish to do a double-take before passing up these shares.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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