Alcoa Corporation (AA) : The industrial giant

The industrial giant Alcoa Corporation, also known as “Aluminum Company of America,” has its headquarters located in Pittsburgh. It operates in ten countries and is the eighth-largest producer of aluminum in the world. Alcoa is a major player in extraction, processing, smelting, fabrication, technology, and recycling, all essential components of the aluminum industry.

Founded in 1888 by Arthur Vining Davis, Alfred E. Hunt, and Charles Martin Hall, Alcoa was the first company to produce aluminum in large quantities. Prior to its invention, aluminum was expensive and difficult to refine. Aluminum production was transformed by Hall’s invention of the Hall-Héroult process in 1886, which also made it more widely available and reasonably priced. After quickly growing under the name Pittsburgh Reduction Company, Alcoa changed its name to Alcoa in 1907.

Alcoa has always made a substantial contribution to wartime endeavours. In World War I, it increased production by 40%, and in World War II, it was an essential source of aluminum. Alcoa made a number of acquisitions in the 2000s, one of which was Reynolds Group Holdings, the company that makes Reynolds Wrap.

Alcoa Inc. underwent a structural split on November 1, 2016, resulting in the creation of two separate companies: Arconic Inc., which specialises in aluminum and metal processing, and Alcoa Corporation, which is concentrated on raw aluminum mining and manufacturing. Alcoa, which ranked as the 15th worst polluter in the US in 2010, has come under fire for its environmental practices despite its position of power in the industry.

Alcoa Stock Rises on Trump’s Tariff Proposal

Early in February and following the imposition of a 10% tariff on aluminum imports by the Trump administration in 2018, the stock of an aluminum producer fell 51%.

Concerns about Donald Trump’s possible trade policies that target China during the next presidential election have escalated, resulting in the largest drop in Alcoa Corp.’s shares in ten months. The stock of the aluminum producer, AA, -1.42%, fell 8.7% in afternoon trading, triggering a broad sell-off in the mining and metals industry. Since the 15th of March 2023, when it fell 10.8%, this downturn represented the biggest one-day decline. Within a period of five days, the stock has dropped by 12.4%. At the same time, 31 of the 33 equity elements of the SPDR S&P Metals & Mining exchange-traded fund, XME, saw losses during its 2.6% decline.

When Trump implied in an interview with Fox News’ “Sunday Morning Futures” program that tariffs on Chinese goods might be higher than the 60% previously reported by the Washington Post, the market began to sell off. The market’s response is similar to what happened in March 2018, when the Trump administration imposed 10% tariffs on imported aluminum and 25% tariffs on imported steel, which caused Alcoa’s stock drop dramatically.

News around the Stock of Alcoa Corp

As of 10:22 AM on Monday, February 26, Alcoa Corp (AA) stock has decreased by -3.7%. With 2,648,461 shares traded, AA’s previous closing price of $26.52 has dropped by -$0.98. Last year, AA has decreased by -46.84% and lost -$3.66 per share in the previous year.

Declines Sharply Amid Broader Market Downturn: Key Takeaways

The most recent trading day ended with Alcoa closing at $26.32, a change of -1.42% from the previous session’s close. The stock moved less than the 0.17% daily loss of the S&P 500. In the meantime, the technology-heavy Nasdaq saw a decline of 0.55%, while the Dow saw a drop of 0.06%.

As of today, the company’s shares that deal with bauxite, alumina, and aluminum products had lost 12.77% of their value over the previous month, which was less than the gains of 5.62% for the Industrial Products sector and 3.98% for the S&P 500.

Investors will be closely observing Alcoa’s performance in the company’s impending earnings report. The company is expected to report EPS of -$0.25, which would represent an 8.7% decrease from the same quarter last year. In addition, our most recent consensus estimate predicts revenue of $2.54 billion, a decrease of 4.83% from the same quarter last year.

The Zacks Consensus Estimates for the full fiscal year predict $0.26 per share in earnings and $10.62 billion in revenue, which would be shifts of +111.45% and +0.62%, respectively, from the previous year.

It is imperative that investors are apprised of any recent adjustments made to analyst estimates concerning Alcoa. Current updates typically take into account the most recent short-term business trends. Positive estimate revisions are therefore indicative of a promising future for the company’s operations.

Our analysis demonstrates a clear correlation between these estimate changes and short-term stock prices.

Alcoa Stock Dips After $2.2 Billion Offer for Alumina: What to watch

Following the company’s announcement of a $2.2 billion all-stock offer to purchase its Australian joint venture partner Alumina (AWCMY), Alcoa’s (AA) shares saw a decrease in premarket trading last Monday. Alcoa is making this move to streamline its operations and increase its mining presence globally. Each Alumina share would be exchanged for 0.02854 shares of Alcoa under the proposed agreement, representing a 13% premium over Alumina’s closing Friday price of 1.02 Australian dollars ($0.67).

In the event of a successful merger, Alcoa will own the remaining 31% of the combined company, with Alumina shareholders owning 31%. The Pittsburgh-based company Alcoa expects this acquisition to save costs and speed up decision-making, especially for its investments in the mining of bauxite and alumina refining. Bill Oplinger, CEO of Alcoa, expressed confidence that the business’s long-term expansion strategy will be advanced by consolidating ownership in AWAC.

Melbourne-based Alumina supported the purchase plan but expressed doubts about its likelihood of success. In order to acquire its substantial 19.9% stake in Alumina, Alcoa indicated an agreement with fund manager Allan Gray Australia, which could facilitate the transaction.

This offer comes at a difficult time for the aluminum industry because of the uncertainties surrounding the global macroeconomic situation and China’s slower economic recovery. Due to outdated facilities and market challenges, Alcoa recently announced the manufacturing process at AWAC’s Kwinana alumina refinery in the western part of Australia has been suspended.

The 50-day moving average is beneath the 200-day moving average, indicating a downward trend in Alcoa’s stock price. In spite of this, since late October, the price has stayed mostly unchanged. Based on an upward trending line connecting recent price movements, resistance might appear around $34.50, and the stock’s 2023 low at $23.07 might act as a critical support level.

Clause de non-responsabilité :
Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing. IronFX n'est pas responsable des données ou informations fournies par des tiers référencés, ou en lien hypertexte, dans cette communication.