Alcoa Earnings Preview: Second Quarter 2011

Alcoa is scheduled to report their second quarter 2011 results after the market closes on Monday, July 11, 2011. Based on our analysis, we at are expecting Alcoa to report better than expected quarterly results that will exceed Wall Street’s consensus expectations.


Earnings Analysis

What a difference a year makes. Last year, Alcoa was eking a slight earnings beat while reporting EPS of $.13. This year Wall Street analysts are looking for earnings per share to nearly triple. Strong global demand for aluminum is likely to push Alcoa’s quarterly results above expectations this quarter and the company looks to be positioned for a strong second half of the year.


Analyst Expectations

We are forecasting revenues of $6.35 billion and EPS of $.36. This would represent revenue growth of over 22 percent from last year’s $5.19 billion in the same period. The current analyst consensus estimates calls for revenues of $6.33 billion and EPS of $.34.


Stock Performance

Since the beginning of 2011 Alcoa’s shares have gained 6 percent, but have underperformed the 9 percent gain in the Dow Jones industrial average.  



Alcoa stock is currently trading at 11x consensus 2012 EPS estimates. This is an attractive valuation based on the company’s projected growth rate. In fact, Alcoa was recently identified as one of 6 blue chip stocks to own in the second of the year.


Recommendation: Buy with an $18 price target

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