What To Expect From Alcoa’s Second Quarter Results?

by Trefis Team
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Alcoa Corp (NYSE: AA) will release its second quarter results and conduct a conference call with analysts on 18th July 2018. Mean consensus market estimates expect the company to report an EPS (Non-GAAP) of $1.51 per share in comparison to an EPS (Non-GAAP) of $0.62 reported a year ago. Revenue is expected to be reported at $3.49 billion, 22% higher on a year-on-year (y-o-y) basis. The company’s substantial improvement in performance is expected to be largely driven by a significantly higher price level for the commodities offered by the company.

Aluminum prices in the second quarter gained by almost 18% compared to the same period last year, largely due to the third-party supply disruptions which have distressed the global aluminum supply chain and consequently supported higher aluminum prices. Alcoa directed toward an alumina and aluminum market deficit in 2018 in its last quarter earnings call, aided by the supply cut at the world’s largest alumina refinery, Alunorte, and additional supply cuts expected in the world’s largest aluminum producer, China, during its winter months. Additionally, uncertainty with respect to the U.S. trade sanctions against the world’s second-largest aluminum producer, Rusal, stirred further concerns with respect to global supply and led aluminum prices to soar in the second quarter. Consequently, on the basis of such market developments,  Alcoa increased its 2018 EBITDA guidance by almost 33% (assuming mid-points) during its first-quarter earnings call, admittedly due to a favorable price impact.

Alcoa is additionally expected to benefit from the recently imposed tariffs on aluminum imports in the U.S. due to a strong exposure of the company to the U.S. aluminum market. Thus, in such a favorable market environment for aluminum producers, Alcoa stands well-positioned to benefit from the same with its global portfolio across all three of its products. Our expectations for the company’s forthcoming results are highlighted in our interactive dashboard analysis. In case you have a different estimate, you can modify our assumptions to arrive at your own fair price estimate for the company.


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