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Do Alcoa's Earnings Even Matter? - Real Time Insight

Alcoa ( AA ) reports fourth quarter earnings after the bell to "kick off" earnings season. Some S&P 500 companies have already reported but Alcoa is the first Dow component to report so it gets the designation of being the "official" kick-off.

The financial media pays a lot of attention to Alcoa on this day four times a year.

But should it?

The argument for paying attention to the "first" to report is that it can set a tone for earnings season. The argument goes, that Alcoa's report somehow foreshadows what the rest of earnings season might look like. So if it's a solid report with an upbeat outlook, then that's a good indicator for the rest of the earnings season.

But Alcoa's estimates have been falling for the fourth quarter. 8 estimates have been revised lower pushing the Zacks Consensus down to just 1 cent from 21 cents three months ago. The full year Zacks Consensus has also been falling.

The aluminum business is a tough one. Aluminum prices have fallen 25% since last year.

Alcoa's stock performance since the Great Recession has also not been a leading indicator of the Dow overall. Shares have significantly underperformed the average.

Alcoa has been in business for 120 years and is one of the largest aluminum miners in the world. It has been a Dow Industrial component since at least 1959. But we are now in an era when Apple has become one of the most valuable companies in the world. Tech giants Microsoft, Intel and Cisco are now also Dow components.

Is it time to replace Alcoa as the official kick-off of the earnings season with a company that is more relevant to investors?

ALCOA INC ( AA ): Free Stock Analysis Report

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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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